What is auto insurance? Auto insurance (or car insurance, motor insurance) is insurance consumers can purchase for cars, trucks, and other vehicles. Its primary use is to provide protection against losses incurred.

The cost of repairing the vehicle following an accident * The cost of purchasing a new vehicle if it is stolen or damaged beyond economic repair * Legal liability claims against the driver or owner of the vehicle following the vehicle causing damage or injury to a third party.Liability insurance covers only the last point, while comprehensive insurance covers all three. Even comprehensive insurance, however, doesn’t fully cover the risk associated with buying a new car.

So-called GAP insurance was established in the early 1980’s to provide protection to consumers based upon buying and market trends. The escalating price of cars, extended term auto loans, and the increasing popularity of leasing gave birth to GAP protection. GAP waivers provide protection for consumers when a “gap” exists between the actual value of their vehicle and the amount of money owed to the bank or leasing company. In some countries including New Zealand and Australia market structures mean that people are more likely to buy a nearly new car than a new car so this is less of a problem.

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