What is gap insurance and do I need it?

Gap insurance is a type of coverage that helps pay the difference between what you owe on your vehicle and its current market value in the event of a total loss. If your used Subaru is totaled, gap insurance can protect you from financial loss by covering this gap.

What This Means

When purchasing a vehicle, particularly a used one like a pre-owned Subaru, its value depreciates rapidly after you drive it off the lot. For instance, if you bought a used Subaru for $20,000 but it’s only worth $15,000 at the time of an accident, you would still owe $20,000 on your loan. Gap insurance bridges this financial gap.

Why It Matters

The importance of gap insurance is underscored by statistics: approximately 30% of vehicles are financed with a loan that exceeds their market value within the first few years of ownership [Source]. This means many buyers could face significant out-of-pocket expenses if their vehicle is declared a total loss without gap insurance.

Your Next Steps

Consider evaluating your financial situation and the depreciation rate of your vehicle when deciding on gap insurance. If you're financing a used Subaru or any other pre-owned vehicle, it's wise to consult with your insurance provider to determine if gap insurance is right for you. For more personalized advice, get in touch with our team at Patriot Auto Sales in Cleveland, OH.