What is gap insurance?

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Cars lose value quickly once you drive them off the lot, making them a depreciating asset. As a result, gap insurance is a type of top-up insurance.

Indeed, gap insurance covers the amount left on your car loan if your car is totaled in an accident. It pays the difference between what you owe and the car’s value. This can help you avoid financial loss in case of a total loss situation. For this purpose, gap insurance is an optional policy to your comprehensive car insurance.