What is gap insurance and do I need it?

Gap insurance covers the difference between what you owe on your vehicle and its current market value in the event of a total loss. If you have a loan on your used Volkswagen or any other vehicle, it may be beneficial to consider this coverage.

What This Means

Gap insurance is particularly important if you are financing a vehicle. When you buy a used car, such as a pre-owned Volkswagen, it starts to depreciate the moment you drive it off the lot. If your vehicle is totaled or stolen, standard insurance typically covers only the current market value, which can be significantly less than the amount you owe on your loan.

Why It Matters

Statistics show that nearly 35% of all vehicles are financed [Source], meaning many buyers could be left with a financial gap in the unfortunate event of a total loss. For example, if you purchased a used Volkswagen for $20,000 and it’s valued at $15,000 after an accident, without gap insurance, you would still owe $5,000 on your loan despite losing the car.

Your Next Steps

Consider evaluating your current insurance policy and the financing terms of your used vehicle. If you are uncertain about your needs, reach out to your insurance agent or a trusted advisor to discuss whether gap insurance is a wise choice for your situation. Additionally, at Stewart Automotive Group, we can help guide you through the process of purchasing a quality used Volkswagen and understanding your insurance options.

If you have further questions or need assistance, get in touch with us today!