The post of May 5 discussed the advantage of having replacement cost coverage for your brand new car. An observant reader noticed the fine print in the New Auto Security Coverage. This coverage does not apply to leased autos.
Leased autos have a risk exposure commonly known as “gap”. “Gap” is the diference between the ACV of an auto and the unpaid balance of the lease contract. “Gap” is to the car industry what “being underwater” means in the real estate business.
Some lease contracts may automatically include gap insurance coverage. Other times you may have to purchase the gap insurance from the leasing company.
Erie’s New Car Security coverage also includes lease/loan coverage to cover the gap between the ACV and the balance due on the lease contract.
Next time you lease a car take time to compare the cost of gap insurance from the leasing company to the cost of adding New Auto Security coverage to your own auto insurance policy. You may be able to save some money!
Another advantage to buying the gap insurance coverage on your auto policy is that you can delete the coverage anytime you want. Near the end of the lease contract you may not actually need the coverage.