How do you drive a new car home without insurance?

Purchase GAP insurance before you drive a new car home without car insurance. GAP insurance protects you from continuing to make payments on a car after it is totaled.

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A former insurance producer, Laura understands that education is key when it comes to buying insurance. She has happily dedicated many hours to helping her clients understand how the insurance marketplace works so they can find the best car, home, and life insurance products for their needs.

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Joel Ohman is the CEO of a private equity backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He has an MBA from the University of South Florida. Jo...

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Reviewed by Joel Ohman
Founder & CFP®

UPDATED: Jan 25, 2021

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Here's what you need to know...

  • Driving your new car home from the dealership without insurance is a potential financial disaster that could bring your financial life to a halt
  • In addition to the immediate depreciation of your car, you are risking more money when you drive without insurance off the lot
  • Purchasing Guaranteed Auto Protection (GAP) insurance before driving your new car home from the dealership is a good idea, especially if you’re buying a new model
  • If you were to get into an accident driving home from the dealership without any insurance, you could owe thousands of dollars

To find out more about the benefits of GAP insurance, read on! Then use our FREE quote tool to find instant comparison rates for your area.

A good rule of thumb to use when deciding whether or not to buy GAP insurance is to check the size of your down payment. In general, if you are putting down less than 20 percent, then you would likely benefit from buying GAP insurance.

The other big part of GAP insurance is adhering to the rules that the insurer devises. If you do not, then you might negate your GAP insurance policy.

For instance, insurers are likely to require you have collision and comprehensive insurance coverage on the leased vehicle at all times during your contract period.

In other cases, you may have a GAP waiver on your lease, which means you are covered without buying additional insurance.

Ask before you sign for your lease because it will impact the costs of leasing the vehicle.

On a side note, look for value added services that also reduce the costs of operation. Such services may include any types of free maintenance and oil changes or other perks that lower the cost of operating the car.

Is it too late?

Even if you initially made an oversight and never bought GAP insurance, it may not be too late. There are a handful of insurance companies that provide such coverage even after you are already well into the lease.

Another rule that might surprise you occurs if your leased vehicle is totaled. The insurer may require you continue making payments on the vehicle until the GAP insurance pays out on the claim, even though it is a total loss.

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Exclusions Apply

When you are leasing a vehicle, review the proposed GAP insurance policy just as closely as you would the actual lease agreement before agreeing to the policy.

Exclusions may apply.

Gap insurance customers often have misconceptions about how the product works, or what it covers.

GAP insurance does not cover:

  • Repairs
  • Car payments
  • Car balance if your vehicle is repossessed
  • Rental car for the times when yours is in the shop
  • Reduced value following an accident
  • Down payment for another vehicle
  • Extended warranties
  • Balance from an old vehicle loan

The list of exclusions may seem lengthy, but it is simply a reminder of what many people think is covered but is not.

Again, if your car is declared totaled by your insurance carrier, your GAP coverage pays the difference between what you owe and the vehicle’s worth.

One tip to keep in mind is that GAP insurance is like other insurance products. If you value your money, you will shop around for such coverage.

Compare GAP Insurance Rates

GAP coverage is most costly if you buy it as a part of your financing package for your car. The car dealership finances not only the car but also the costs of GAP insurance in with it. That equates to paying for the costs of interest too.

Comparing quotes online is easier, it gives you the option to choose your coverage and pick the best price.

Start out by finding carriers that provide GAP coverage, and follow the prompts to help create your quote.

A handful of insurers will be given to you:

  • Review the estimates closely and carefully because the carriers may not all be offering the same coverage limits.
  • Decide what limits are closest to what you need.
  • Par down the list by crossing off any companies whose credit rating is not within the A-range.
  • Review the customer service rankings and buy the corresponding issue of Consumer Reports that covers such topics.
  • Look at what the coverage does include and choose the coverage that suits your budget as well.

Insurance costs vary widely even for the same customer. It pays to compare coverage across the board.

When you are in the market for insurance, see how much you save when you buy multiple insurance policies from the same carrier. It helps to keep all of your information with one carrier, and can even support you in efforts to save some money.

Lower your costs some more by increasing deductibles.

Don’t increase your deductible to an amount you cannot comfortably afford to pay. GAP insurance should help you sleep better at night, not keep you wondering how you will pay that tab too.

Start comparing car insurance rates by using our FREE tool below!



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