whitex
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Worth noting that this only works if you have a loan/lease in the USA. It sounds like in UK you can get a gap insurance even if you own the car, and it can be insured up to the value of a new car. In the past I always had a large enough down payment on my cars which I financed, so that gap insurance never made sense (since in the US it only covers the gap between the replacement value and owed amount, not replacement value and new car). There used to be a few car insurance companies in the US a while back which advertised "if you total your car in the first two years of ownership, we buy you a new one" but I have not heard those adverts in a long time.If you have a loan on the car, or if you are leasing, the amount owed to the holder of the loan (or the leasor) may at times be less than the depreciated market value of the car. So now assume you have an accident where the car is totaled. In that case you might get reimbursed for less than the amount owed to the lender. In that case Gap Insurance picks up the difference.
In many States in the US, Gap Insurance is mandatory on all leases.
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