What Is Gap Insurance for a New Car?

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Gap insurance is a very particular type of insurance premium for a new car. Learn about gap insurance for a new car with help from an independent insurance agent and small business owner in this free video clip.

Part of the Video Series: Auto Insurance
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Video Transcript

Hello, this is Melissa Morley with All Seasons Insurance. Today, we're going to talk about what is gap insurance for a new car. Gap insurance is an insurance premium based on the difference between what you owe on car and the actual value of it. This comes into play usually in the first couple of years that you own a vehicle. When you go to go shopping for a new car, you've waited and you're going out, and you're getting your new car, and you've done all your due diligence, and you've already found out how much the insurance is going to be. You get to the finance office at the car dealership, and you find out that they're offering you gap insurance. Here is a little nice thing to know. In many cases, and this works only on brand new cars, you can get gap insurance from your insurance broker or agent, generally speaking, a whole lot cheaper than what the finance companies will charge you at the point that you buy a new car. So it's well worth talking to your insurance agent and asking about this gap insurance. And what gap insurance does specifically is from the moment that you take a new car and you drive it off the lot, you can lose five to seven thousand dollars in damage in the first block that you've driven that car off the lot. It's not longer a new car. And it can take a couple of years for that equity to build back up in your car, or the depreciation on it to reach down to the amount that the car is worth. So, people need to really stop and look at the gap insurance. You can save quite a bit of money if you do a little bit of shopping before you get to the car lot. And happy new car buying, you're gonna love it, and make a smart choice on that gap insurance. This is Melissa Morley with All Seasons Insurance, and today we we're talking about what is gap insurance on a new car.

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