Congratulations on your new car, you deserve it. You also need it to get to work. You have signed more paperwork than there is paper in the world it seems. Now, although you have a beautiful and reliable vehicle that will last for years, you also have a new loan or lease you are responsible to pay over the next 3 to 5 years.

Everyone knows new cars depreciate the moment you drive off the lot. Depending on market conditions, the amount of depreciation differs from vehicle to vehicle and year to year. Often times, it can be as much as 10% the moment you drive off the lot and 20% or more after the first year. As your car depreciates, a loan coverage gap can be created. A coverage gap occurs when the amount you owe on the vehicle, exceeds the market value of the vehicle.

This becomes critically important if you experience an accident and your car is totaled. If you have a coverage gap caused by depreciation, you could still have to pay on a car that doesn’t exist. Even worse, at the same time, you have to start new car payments again on a new car, so you can get to work.

The good news is you do have options when it comes to protecting yourself from a coverage gap. One option is to purchase gap insurance from your car dealer. You may have the best car dealer in town but they are a car dealer and dealership gap insurance tends to be more expensive. You need to have liability insurance before you drive off the lot anyway, so why not ask your independent insurance agent about gap insurance. Gap insurance from your independent agent will also make the claim settlement process much more convenient for you since you’ll be settling all the details with one source instead of adding the dealer’s Gap provider (wherever they are located) into the mix.

Your trusted independent agent will be able to provide a free and valuable insurance review including important details about depreciation on the make and model of your car, taking into account current market conditions. Having this knowledge will help you make the best decision about gap insurance for you and your family.