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What is gap insurance and why do I need it?
"Do I need gap insurance if I already have full coverage? What does it cover?
"
Shannon Martin · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
Gap insurance or gap coverage pays for the difference between your vehicle’s value and the amount owed on the vehicle loan. A vehicle begins to depreciate immediately when you take possession of it, so it is common to owe more money for the loan on the vehicle than what the car is worth (the actual cash value).
Full coverage refers to having
comprehensive coverage
and collision coverage
on the vehicle, in addition to liability coverage. This only pays up to the actual cash value of the vehicle in most instances. If your car is no more than two to three years old and you have a loan or lease, it’s recommended that you get gap insurance.
“
View full answer
- Gregory R.
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