Contract Lease Gap Insurance: Protecting Your Investment
If you are leasing or financing a car, you may be familiar with the term “gap insurance”. This type of insurance covers the difference between what you owe on your car and its actual cash value (ACV) in the event of a total loss. But did you know that there is a specific type of gap insurance for those who are leasing a vehicle?
Contract Lease Gap Insurance, also known as CLG, is a type of insurance designed specifically for those who are leasing their cars. Unlike traditional gap insurance that covers the difference between your car’s value and what you owe, CLG insurance covers the difference between the ACV of the car and the amount remaining on your lease.
Why Do You Need CLG Insurance?
In the event of a total loss, your car insurance policy will typically only cover the ACV of the car. This means that if you owe more on your lease than the ACV of the car, you will be responsible for paying the difference out of pocket. This can be a significant amount of money, especially if you have a high-end luxury car.
CLG insurance can help protect your investment by covering this gap. This means that if your car is totaled, the insurance company will pay the remaining balance on your lease, so you don’t have to come up with the money yourself.
How Does CLG Insurance Work?
CLG insurance is typically offered by the dealership or leasing company at the time of your lease agreement. It is a separate insurance policy from your car insurance, and the cost varies by insurer. The insurance company will pay the difference between the ACV and the remaining balance on your lease, up to the maximum coverage amount.
For example, let’s say you leased a car worth $30,000 and have a remaining balance of $20,000 on your lease. If your car is totaled and the ACV is only $25,000, your car insurance policy will pay $25,000, leaving you responsible for the remaining $5,000. However, if you have CLG insurance with a coverage amount of $5,000, the insurance company will pay the remaining balance on your lease, so you won’t owe anything out of pocket.
Is CLG Insurance Worth It?
CLG insurance can be a worthwhile investment, especially if you have a high-end luxury car or are leasing a vehicle for a long period of time. It can also provide peace of mind knowing that you won’t be responsible for a large sum of money in the event of a total loss.
However, it’s important to weigh the cost of CLG insurance against the potential benefits. The cost of CLG insurance can vary depending on the insurer, so it’s important to shop around and compare quotes.
Contract Lease Gap Insurance can be a valuable investment for those who are leasing a car. It can help protect your investment by covering the difference between the ACV of the car and the remaining balance on your lease in the event of a total loss. If you are considering leasing a car, be sure to ask about CLG insurance options and compare quotes to find the best coverage for your needs.