Originally from Auto-Owners Insurance
Your brand new car depreciates as soon as you drive it off the lot!
Peggy Claytor
Gap insurance (or auto loan/lease coverage) is an additional coverage you can add to your car insurance policy. It covers the remaining loan or lease amount you may have on your vehicle if it’s totaled in a covered accident.
So, if your car is damaged in an accident and your insurance company deems it a total loss, your insurance company will pay off your remaining loan balance rather than just the current value of your vehicle considering age, condition and mileage. This loss of value over time is called depreciation
