I’m currently leasing a vehicle here in Nevada and was advised to get gap insurance for it. What is gap insurance?

Euhmir

Henderson, NV

Gap Insurance is a form of insurance that protects against liability incurred in the event a leased or financed vehicle is damaged or is totaled beyond repair. What Gap Insurance will do is to basically “fill the gap” between the amount that you already paid for the vehicle and the amount needed to completely pay off the lease on the said vehicle. If said vehicle is also financed or acts as a collateral for a loan and the monetary value of the vehicle is lost due to theft or accident, Gap Insurance will take care of paying off the debt to the lenders. Some banks or lender’s have recently, either highly encouraged or required borrowers to get gap insurance for their vehicles for car loans and auto financing purposes.

Now the question is, do you really need one? It actually depends. What’s the likelihood of losing your car to accident or theft there in Nevada? If the car is being financed and you’ve already paid a significant portion of the loan then it may not be cost effective to get gap insurance since you may be paying more for the actual insurance as compared to the actual cash value remaining on the vehicle. If you are required by your lenders see if they are willing to compromise with comprehensive insurance coverage instead which may prove cheaper since it should already be included under most car insurance policies you take.