Depreciation Protection
Vehicles begin losing value the moment they’re purchased. In the event of a total loss, standard auto insurance typically pays the vehicle’s actual cash value (ACV), which reflects depreciation—not the original purchase price. Depreciation protection provides financial protection by covering the difference between a vehicle’s ACV and its original purchase price. This helps borrowers preserve their investment while also reducing loss exposure tied to outstanding loan balances.
What Depreciation Protection Can Include
If you finance or lease your vehicle, you may owe more than its depreciated market value for several years. Without additional coverage, a total loss can create an unexpected financial burden at a stressful time. Depreciation protection helps close that gap so you are not left managing a shortfall between insurance payout and original cost. TEJ Agency works with lenders to ensure depreciation protection is appropriately aligned to real-world loan risk.
Purchase Price Protection
Covers the difference between the vehicle’s actual cash value and its original purchase price if the vehicle is declared a total loss.
Loan Balance Support
Helps reduce financial strain when the outstanding loan exceeds the vehicle’s current market value.
Structured Settlement Options
Provides clarity on how claims are calculated so you understand how coverage responds before you ever need it.
Carrier-Specific Enhancements
Some insurers offer extended eligibility windows or valuation methods that provide additional flexibility for newer vehicles.
How Depreciation Protection Works
Understanding how this coverage functions helps you make informed decisions.
TEJ Agency helps you review eligibility requirements, time limits, and policy conditions so there are no surprises later.
Your vehicle is declared a total loss after a covered event.
The insurer calculates the vehicle’s actual cash value.
Depreciation protection applies to cover the difference between ACV and the original purchase price
The settlement helps preserve your financial investment and reduce out-of-pocket exposure.
Frequently Asked Questions
Is this the same as gap insurance?
Not exactly. Gap insurance focuses on the remaining loan balance, while depreciation protection addresses the difference between ACV and the original purchase price. In some cases, both may work together depending on your situation.
Is there a max payout?
The policy can pay up to $10,000 on a loss.
Does the policy have to be bought at the time of the vehicle purchase?
No, the enrollment period is up to 365 days after vehicle purchase
Are claim payments made to the lending institution or to the borrower directly?
All claim payments are made to the lender.
