When you purchase a new car, it’s important to make sure you have the right protection in place. One key coverage to consider is GAP Insurance-short for Guaranteed Asset Protection.

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How GAP Coverage Works:

When your car is a total loss, your standard auto insurance typically pays the current value of the car at the time of the loss. For new cars, this can be significantly less than what you owe on your loan or lease, especially in the first few years when vehicles depreciate rapidly.

GAP insurance covers the “gap” between:

1. The amount your auto insurance pays (actual cash value).
2. The balance you still owe on your car loan or lease.
3. Example:

• You buy a car for $35,000 and still owe $32,000.
• A total loss occurs, and your insurance pays $28,000 (current value).
  Without GAP coverage, you’d pay $4,000 out of pocket.
• With GAP coverage, your policy covers that $4,000 difference, leaving you fully protected.
  

Why GAP Insurance is Especially Important for New Cars

• Rapid depreciation: New cars lose value quickly, often 20–30% in the first year.
• Leases: GAP is often required for leased vehicles to protect the leasing company and you.
• Peace of mind: It ensures you won’t owe money on a car you no longer have.
  

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How to Purchase Gap Insurance

GAP coverage is highly recommended to avoid unexpected out-of-pocket costs. While many dealerships offer GAP coverage at the time of purchase, you can often secure better value through your insurance provider. We encourage you to contact us first—our team can walk you through your options and help you find potential cost savings. Call Bacon Insurance Group today to see whether GAP coverage makes sense for your new vehicle and to easily add it to your auto policy. It’s a simple step that can protect your investment from day one.