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Do I need gap insurance for my new 2021 Mercedes GLC300?
Should I buy gap insurance? I recently got a 2021 Mercedes. The purchase price was $49,000 and my loan is for $33,000. I was offered gap insurance through the dealership but declined because I didn’t think I needed it. But now I’m wondering... what would happen if the vehicle was totaled?
Emily Maracle · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
“You will not likely need
gap insurance
for your Mercedes since your loan is significantly less than the purchase price of the vehicle.Gap insurance covers the difference if your car is totaled and you owe more on your loan than your vehicle is worth.
So, let’s say the unthinkable happened this week and your Mercedes was totaled, meaning the estimated cost of repairs is more than the vehicle’s current worth. When settling your claim, the insurance company will determine the
actual cash value
(ACV) of your vehicle, which is the cost of the vehicle brand new minus depreciation. The ACV is what you’d receive in a payout—and it should cover the balance of your loan in this instance.If you’d like to do the math for safe measure, you can calculate the depreciated value of your vehicle after a year (it will likely be worth 10-20% less than its purchase price) and your anticipated loan balance after a year of making payments. If your math indicates that your loan balance may eventually exceed the car’s ACV, you should buy gap insurance at that point.
Most insurance carriers offer some form of gap insurance, so you may be able to add it to your current policy. And if you decide you no longer need it, you can easily remove it.
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- Gregory R.
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Jerry partners with more than 50 insurance companies, but our content is independently researched, written, and fact-checked by our team of editors and agents. We aren’t paid for reviews or other content.
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