If you plan to lease a car, ask if the lease contract will include “gap insurance.” If not, you’ll need to add this expense to get your ultimate lease cost.
Gap insurance is coverage that protects you in case your leased car is stolen or involved in a severe accident. In some cases, your insurance company might be willing to pay only the current market value of the vehicle.
Because new cars depreciate steeply in the first year, there may be a gap between the amount the insurer will pay and the amount you owe the bank. You might have to come up with thousands of dollars out of your own pocket; gap insurance pays this additional amount.
Today, some car leasing contracts include gap coverage but that’s not always the case. If it isn’t, call your insurance company to arrange for the additional coverage or purchase gap insurance directly. Enter “gap insurance” on an Internet search engine to find insurers offering this coverage.