What's the difference between gap insurance and new car replacement coverage?
I'm going to be purchasing a new Subaru Crosstrek. My lender offers gap insurance, while my car insurance company offers new car replacement insurance. Is there a difference?
“New car replacement insurance protects you if your new car if it is totaled, normally only in the first year or two, by paying for a similar make and model minus your deductible.
Gap insurance protects you if there is a difference between the actual cash value of your vehicle and the amount you owe on your loan after a total loss. It covers this “”gap””; it does not pay for a new car. Gap insurance can be maintained for the lifespan of your loan.
Both are useful coverages to have on a new vehicle, but you would typically only have one or the other. Depending on your situation, one may be more important to you than the other.
Ask your current car insurance company if they offer either and what the cost is to add them to your policy. You can also shop around to compare car insurance quotes online and get a better rate for coverage.”
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