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Is gap insurance a scam?
I’m just about ready to finally buy my new Mazda CX-30, but I’ve been debating whether or not I need the gap insurance the dealership’s suggesting. Is gap insurance a scam or will it be helpful for me?
Shannon Fitzgerald · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
How exciting that that
Mazda CX-30
is coming home with you soon—a very fine choice in crossover SUV might I add! Despite how pushy salesmen at the dealership might seem, gap insurance
is not a scam! This coverage is actually very useful if you plan on taking out a loan on your vehicle, especially if you’re making a smaller down payment.
Here’s how it works:
- Your car significantly depreciates in value the second it’s off the lot—often by 20 or 30%
- Worst case scenario occurs—your vehicle is totaled or stolen and cannot be recovered
- Comprehensive coveragepays out the market value to you, let’s say $15,000, but you still owe $22,000 and are therefore left with $7,000 worth of loans
- Gap insurance, or guaranteed asset protection, covers that $7,000
Essentially, gap insurance is good protection as long as you still owe more in loans than your car is worth on the market. Once this is no longer the case, you can then
cancel the gap insurance
and receive a refund in most cases. Keeping yourself armed with coverage like gap insurance can be a huge financial help should worst-case scenarios arise. Finding affordable policies can seem daunting, however—that’s where
Jerry
steps in! The app is free to use and instantly analyzes custom quotes from over 50 top insurance companies to track down the lowest rates available to you. The average user ends up saving $887 a year on
car insurance
, so it’s definitely worth a look to keep that shiny new CX-30 well-protected! View full answer
- 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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