There’s nothing like that feeling of purchasing a brand new vehicle and driving it off the dealership lot. The problem is that most new vehicles lose 20% of their value within a year.
So what happens if you get into an accident or your new vehicle is stolen and you need to file a claim during that first year timeframe? Having gap insurance will typically cover the difference between what your vehicle is currently worth and the amount you actually owe on the loan or lease.
How gap insurance works
Gap insurance, or loan/lease coverage with MAPFRE, is optional and is available to you if you are the original loan or leaseholder on a vehicle.
If you have loan/lease coverage and need to file a claim and say you owe $30,000 on your loan but your vehicle’s assessed value is only worth $25,000, the gap insurance covers the $5,000 gap, minus your deductible.
Why you might need gap insurance
The Insurance Information Institute suggests purchasing gap insurance for your new vehicle if you:
- Made less than a 20% down payment
- Financed your vehicle for 60 months or longer
- Leased your vehicle
- Purchased a vehicle that depreciates faster than average
- Rolled over negative equity from an old vehicle loan into a new loan
How to purchase gap insurance
Some dealerships will offer you the option to purchase gap insurance. When you have your auto policy with MAPFRE, you also have the option to purchase loan/lease coverage, but your vehicle must include Collision and Comprehensive coverage.
Your Independent Agent can help you add loan/lease coverage to your policy and go over the costs associated with the coverage. With MAPFRE, there is a 5% charge to both the Collision and Comprehensive premiums for the endorsement.
If you still have questions about MAPFRE’s loan/lease coverage or other parts of your auto policy, feel free to contact an Independent Agent in your state. If you’re not currently insured with MAPFRE in Massachusetts, get a fast, free online quote and learn how much you could save!