The Importance of Gap Insurance
If you're interested in leasing a new Honda model from us here at Fox Honda in Auburn, NY, consider getting gap insurance. This car insurance coverage helps pay off your car loan if your vehicle gets totaled or stolen and you still owe more than the car's depreciated value.
Why you need gap insurance
Many lenders require you to have collision coverage or comprehensive coverage when you are leasing a new car. Collision and comprehensive coverage would help pay for your totaled or stolen Honda vehicle up to its depreciated value. However, if you still owe more on your lease than the vehicle's depreciated value, that's where gap insurance comes in. Gap insurance is used in conjunction with collision or comprehensive coverage in cases where you're underwater on your auto loan.
How it works
Say you owe $25,000 on your loan for a new Honda model. If the car's depreciated value is worth $23,000 when it is totaled in an accident, then your collision coverage would pay the $23,000. Having gap insurance means your insurer would pay the remaining $2,000 of the loan. If you didn't have gap insurance, you would have to settle the loan yourself by paying $2,000 out of pocket.
Gap insurance can be a wise investment on your leased Honda vehicle depending on your financial situation. If you need help figuring out your lease and insurance options in Auburn, New York, feel free to contact us at Fox Honda.
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