Car aren’t getting any less expensive these days. Car leases and loans are being stretched out over longer periods of time to help manage the cost of paying for more expensive vehicles. This creates a new, uncovered exposure and everyone should understand the risk as well as the options for protection. It is suggested that new cars lose up to 30% of their value as soon as they are driven off the lot. The challenge that this creates is how to handle the gap between the value of the car and the value that remains on a loan or lease contract. A simply example would be a $30,000 Chevy Impala. Drive it off the lot and it is now worth $22,000. Hit a deer on your way home from the dealer and total the vehicle. The insurance company would value the car at $22,000, but you have a lease or loan for $30,000. You now have an $8,000 headache.
The newest solution? Buy Loan/Lease Gap coverage. This can be purchased from the leasing company or your insurance company. In most cases, insurance companies charge about $25.00 per six months for this protection. Be sure to understand your exposure and review your options with your insurance professional. Don’t have an insurance professional? Call us at 610-933-4950.