One Car Accident Can Leave You with a Hefty Remaining Balance

By: Edward L. Blais, JD, CIC

President, Blais Insurance

New car buyers lose thousands of dollars the moment they drive their vehicle off the lot. Financial experts say new cars can lose up to 30 percent of its value in the first year. This depreciation presents a financial vulnerability for a specific segment of consumers, and Blais Insurance would like to highlight a strategy to protect yourself from significant losses.

First, it is important to imagine that you are receiving the keys to a newly leased vehicle fresh off the production line. A week doesn’t even pass by before you are involved in a major car accident. You leave the incident unscathed but the damage to your car is extensive, and your insurance company deems it a complete loss.

At this point, the leasing company will receive a check in the amount of the vehicle’s actual cash value, unless additional coverage was added. A few weeks later, you receive a bill for the remaining amount on your lease contract. Ultimately, this amounts to you continuing to make payments on a car you no longer have.

In recent years, more people have been leasing their vehicles because it is more affordable on a month-to-month basis. Unfortunately, depreciation is the main drawback of a new vehicle, regardless of make or model, and it costs you more if your car is totaled or stolen.

Insurance companies have recognized this financial vulnerability years ago, which is why loan/lease gap coverage is available. Gap insurance covers the amount you could still end up owing in your lease or finance agreement.

Gap insurance does not have to be purchased before leaving a dealership, but the longer you wait, the higher the risk that you might have to pay thousands if something were to happen. Avoid the financial headache that could ensue, and call Blais Insurance at 401-725-0070 to learn more about gap coverage.