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Do I need gap insurance or replacement cost coverage for my Hyundai Sonata?
I'm buying my first car and my insurance company is including new car replacement coverage. The dealership is also offering me gap insurance. Both would provide coverage for five years, which is the length of the loan. Do I need either of them? What is the difference?
Emily Maracle · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
“
Gap insurance
and new car replacement insurance
are two coverages you should consider when purchasing a new car. Gap insurance covers the difference if you owe more on your loan than the value of your vehicle.
New car replacement coverage ensures that if your vehicle is deemed a total loss, you’ll receive a payout that enables you to buy a a comparable vehicle. New vehicles can depreciate 35% within the first year, so adding this coverage can be a good idea.
To decide if you need either, you’ll want to look at the amount you’re financing and what your vehicle is worth. If you’re concerned about paying your loan, you’ll want gap insurance. If you would want a similar car if your vehicle is totaled, you’ll want to go with new car replacement coverage.
“
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- Gregory R.
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