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Discussion Starter · #1 ·
(I'm posting this in 4.5 but it would likely apply to late model 4.4s too.)

When I bought my new '18 Accord in March of 2019 and was applying for a loan I was offered gap insurance which would cover the drive-off-the-lot depreciation should the car get totaled in the first year or so. Since I paid cash instead any loss would be on me.

But when I saw R4W members getting offers at or over their purchase price and some actually selling their RAV4s I decided to look up the value of my three year old Accord. Sure enough book value is more than I paid. So if it got totaled supposedly I'd get at least my purchase price back from insurance. There would be no gap.

So my question is, are dealers still trying to add gap insurance on new or late model cars? Seems that would be the ultimate ripoff - charging the customer for something they'll likely never have to make a payout for.
 

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2021 RAV4 XLE Premium Hybrid
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Gap insurance is still offered. It was offered to me last summer when I got my XLE Premium hybrid, but I turned it down.

Just because used car prices have soared and you may be able to sell one for more than you paid for it, does not mean you would get that from an insurance company should your vehicle be totaled. The insurance company would, at best, give you "book value" which would be way less than what you could sell it for. The insurance company is in the drivers seat and is in a position to dictate to you the terms of a settlement.

Gap insurance is, indeed, a rip off, but it may be needed by some people that may not have the resources to pay the difference should their car be totaled. Some finance companies require gap insurance from those with a low credit rating.
 

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Just because it doesn't apply to you doesn't mean it's a rip off.
Last time I checked Dealerships were not in the insurance business. Therefore the only reason they sell GAP insurance it is to make a profit.
Dealer sells the policy on behalf of actual insurance company and take a huge commission. Which in turn makes buying it from dealer 100% a rip off.
We are informing the OP on his/her options to save them money. Irrespective of if it applies to you or not this is simply to answer asked question by OP
 

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Discussion Starter · #8 ·
Just because it doesn't apply to you doesn't mean it's a ripoff.
As I tried to say the reason it's now become a ripoff in many cases is because of the increases in used car values.

For instance the 2018 Accord hybrid I bought 3 years ago for $23,777 now has a Clean Trade-in value of $25,450 according to Nadaguides. And AFAIK if it got totaled my insurance company would have to pay me NADA Retail value plus Connecticut sales tax which would come to almost exactly $30,000.

So had I paid whatever the premiums would've been for three years for gap insurance it would've all been free gravy for dealer and whatever insurance company they're using.
 

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As I tried to say the reason it's now become a ripoff in many cases is because of the increases in used car values.

For instance the 2018 Accord hybrid I bought 3 years ago for $23,777 now has a Clean Trade-in value of $25,450 according to Nadaguides. And AFAIK if it got totaled my insurance company would have to pay me NADA Retail value plus Connecticut sales tax which would come to almost exactly $30,000.

So had I paid whatever the premiums would've been for three years for gap insurance it would've all been free gravy for dealer and whatever insurance company they're using.
Used car values could end up collapsing as quick as they rose. Considering people are taking longer loans than ever it is quite possible.
 

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As mentioned above, you can get gap insurance from your auto insurer for a lot less than a dealer. It only is worth it if you owe more than the vehicle is worth. New car replacement is a better coverage if you have equity in the vehicle and it gets totaled.
 
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