What is better for a new Mitsubishi, gap insurance or new car replacement insurance?

I just bought a new Mitsubishi Lancer and my car insurance offers gap or new car replacement insurance. What do these actually cover?

Answer provided by
Emily Maracle
Answered on Apr 30, 2021
Emily Maracle is a car insurance specialist living in New York. Originally from the Pacific Northwest, she has a degree in English Literature and a background in customer service. She enjoys cooking, gardening, and living sustainably. In the future, she can't wait to upgrade to a hybrid or electric car.
“Since a new vehicle’s value depreciates quickly, new car replacement insurance ensures that if your vehicle is totaled, you’ll be reimbursed with enough money to get a car of a similar make/model. Coverage can vary, with some policies offering the option to repair the vehicle instead of replacing it.
When deciding what’s best for your vehicle, it’s important to look at the bigger picture. Gap insurance covers any difference between the amount you owe on your loan and the actual cash value of your vehicle (original price minus depreciation).
If your vehicle was totaled tomorrow, would you be able to pay off your loan? Or would you experience financial hardship?
If you wouldn’t have an issue paying off your loan, new car replacement insurance may be a better option for you as you’ll be able to get into a new vehicle faster.

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