Did you know that even if you follow expert advise to purchase optional auto insurance in addition to your state's minimum liability insurance, for example, full collision and comprehensive, your car may not be fully covered? Unless you have also purchased Gap insurance your car will probably not be covered if it is stolen or “totaled” within the first 2 years of purchase. This is because cars depreciate, a lot.
As soon as you drive your newly purchased car off the dealer lot it becomes a "used car". Therefore, its market value can be immediately reduced by as much as $1000 or more! Also, if you finance your new car (like a no money down-no payments for 6–12 months deal), most finance companies will require that you purchase full collision and comprehensive coverage. But if you your car is stolen or totaled, especially within the first two years, you will still owe the finance company the full amount of the car loan (don't forget the tax and license fees that may be rolled into the loan). And your collision or comprehensive insurance will only compensate you for the depreciated amount of the car at the time of the theft or accident. So you could end up paying a huge difference to the finance company out of your own pocket and still have to buy another car.
Surprised, car owners will find out that they are not compensated for the full amount of their cars, or for the amount on the car loan that they still owe.
By some estimates from industry experts, on an average a car can depreciate as much as 30% within the first three months after it is bought! Imagine buying a car for $30,000 and having it totaled within the first three months. You could be compensated by your insurance policy for just $24,000, which if you purchase another comparable car it will cost you an additional $6,000. Then you will still owe another $6,000 to your finance company to pay off your old loan!
For this reason, Gap insurance is recommended for cars that are either bought or leased. However, Gap insurance policies vary (example some Gap insurance does not cover for stolen cars or totaled cars due to natural disasters) in coverage and premiums so it pays read and understand your Gap insurance policy and to shop around for quotes, starting with http://autoinsurancegroup.com/auto-insurance-quotes.html
The good news is that some insurers include Gap insurance in their Comprehensive coverage. Others, such as MetLife Auto and Home Insurance do not offer Gap insurance, but will replace a car up to one year or 15,000 miles, and not take into consideration the car's depreciation amount even if you didn't finance it.
The other bit of good news is that Gap insurance is generally cheap. An average policy costs about $14 for six months of coverage. So for the cost of one dinner for two at a chain restaurant, $28, you can buy yourself twelve months of peace of mind that your brand new car will not cause you financial hardship if it is stolen or totaled before its new smell fades.