Gap Insurance

GAP Insurance protects the customer if something happens to the lease vehicle during the lease that requires the lease to be paid in full. For example, if your car was stolen and not recovered, your insurance company might say that your car was worth $15,000 based on current used car prices.  Your payoff on your lease might be $18,000. If you don't have GAP Insurance you are responsible for that $3,000 difference.  Most people in a lease are in this negative equity position. Many dealers will try to sell you this coverage for about $500 - don't fall for it.

Like so many things, the idea of GAP Insurance is a good one. You just shouldn't pay the dealer a huge profit for printing a form. Many lease companies include GAP insurance with their lease agreements at no additional cost.  Also, many insurance companies will now let you pick up GAP coverage or Auto Loan/Lease Pay-off coverage for a small fee (about $40per year) on your regular auto insurance.