What Is Gap Insurance and Why Should New Car Owners Consider It?

Gap insurance is designed to cover the difference between the amount you owe on your auto loan and the actual cash value of your car if it’s totaled or stolen. New vehicles can lose value quickly due to depreciation, so there’s often a difference between your loan balance and your car’s market value, especially in the first few years.

If your new car is involved in an accident and declared a total loss, your standard auto insurance policy typically pays the current value of the vehicle, which could be lower than your loan payoff. This can leave you responsible for paying off the remaining balance out of pocket.

Why New Car Owners in Florida Should Consider Gap Insurance

Florida drivers who finance or lease a new vehicle may be especially vulnerable to this financial gap. Here’s why gap insurance can be a wise choice:

• Rapid depreciation: New cars can lose a significant portion of their value within the first year. If your vehicle is totaled soon after purchase, your insurance payout may not cover your outstanding loan.
• High loan-to-value ratios: If you made a small down payment or chose a longer loan term, you may owe more than your car is worth for a longer period.
• Florida’s unique risks: With the potential for severe weather, flooding and heavy traffic, Florida drivers face increased risks of total loss events.

How to Get Gap Coverage

If you’ve recently purchased a new car or are considering financing, let us help you protect your investment from unexpected losses.

Contact us today to learn about gap insurance and how our team can support your auto insurance needs.

This blog is intended for informational and educational use only. It is not exhaustive and should not be construed as legal advice. Please contact your insurance professional for further information.