Do I Need Gap Insurance?
Do I Need Gap Insurance? In the case of cars, gap insurance covers the difference between what you owe on your car loan and the actual cash value of your car if it was accumulated in an accident. This “gap” can amount to a large amount of money, which you will have to pay out of your own pocket – especially if you did not cut a lot of money when buying the car (less than 20% or so) or take out a long-term loan (for example example, for more than five years). While the cost of gap insurance varies greatly with the vehicle, it is often $20-$60 a year, and you usually only need it for the first few years. Here’s how to determine if you need gap insurance for your vehicle.