Car Insurance Look

So, what is gap auto insurance? Good question. If you are like me, you have never heard of it before in your life. To understand gap insurance, you actually have to begin by understanding the concept of negative equity.

In truth, this is something with which all car owners should be at least passingly familiar. More often than not, a car will depreciate at a much faster rate than you expect. Even as you are paying off your loan, the car will be depreciating in value — so you may end up paying your dealer far more than your car is truly worth. This happens more often than you can even imagine.

The problem here is that most of the car insurance policies we have will only cover damages going up to the car’s fair market value. Therefore, you as the car owner can often be left having to pay for damages out of your own pocket, even when your car gets totaled.

As you will see, this is where gap insurance comes into play.