Mouse trap with cheese

Mind the Gap: Don’t Get Caught in the Auto Lease Gap Trap

Gap insurance is a smart move when leasing a car.

If you drive a leased car or are thinking about leasing a new car, heads up on a potential issue.

If your leased auto is totaled in an accident or stolen, your insurance carrier will pay the leasing company (who legally owns the car) the current actual cash value of the car, also known as the “book value”. The problem is that many auto lease contracts include provisions for terminating the lease early, even if the cause is not your fault. This final termination charge can cause the buyout term of the lease to EXCEED the book value.


  • Leased car has a new value of $35,000
  • Car is stolen 12 months into the lease
  • Book value is $28,000
  • Car lease buyout ( that you agreed to) states the value is $30,000
  • This is the Gap

New York state law mandates that all auto leases in the state INCLUDE Gap insurance, which picks up the $2000 gap in the example above. Recently we have heard of a few dealers that are asking clients if they want to delete or remove the Gap insurance. This would lower their monthly lease cost.

Going without Gap Insurance may save you a few bucks on the lease cost per month, but it could potentially cost you thousands if you have to terminate your lease early.  Please be sure your lease includes Gap Insurance.