When you’re buying a new car, you want to seriously think about getting gap insurance. Gap insurance is property damage insurance that covers the difference in value between what you owe and the fair market value of your car.
This can be very important because there is a move toward longer loan terms on cars. Now you will see loan terms for five and six years. The problem is, in years five or six, your car may not be worth as much money as you owe because of depreciation. If you have gap coverage with the policy you purchased from the dealer, it covers the gap between what you owe and what the fair market value of your car is if it is totaled in an automobile accident. It is surprisingly inexpensive coverage at the time you buy your car, but it is absolutely valuable if you get into a car accident and it is worth it. (If you’re buying a new car, ask your current auto insurer if they offer it.) It’s definitely worth purchasing at the time you buy your car.