Gap insurance: Here’s when you might need it

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If you’ve financed or leased a new car with a minimum or no down payment, you could be at risk of not having your vehicle fully covered if you’re in an accident.

Gap insurance is designed to cover the gap between the outstanding balance on your auto loan and the market value of your vehicle if it’s totaled in an accident or stolen.

Vehicles start to depreciate in value the minute you drive them off the lot. It isn’t uncommon for some vehicles to lose 20 percent of their value within a year. The need for gap insurance can arise if only a small down payment is made, when it is possible for the loan amount to exceed the market value of the vehicle itself.

For example, if you owe $35,000 on your vehicle but due to depreciation the fair market value of your vehicle is $31,000, you could be at risk for the $4,000 difference if your car is totaled in an accident — even if the accident isn’t your fault. Gap insurance would step in and cover the $4,000 difference.

However, there are some caveats. Many gap policies won’t cover negative equity from a trade-in that has been rolled into the new loan or for financing extended warranties, dealer add-ons and other options. Make sure you know what your policy covers.

As a general rule, don’t buy gap insurance at the dealership. Talk to your auto insurer about the best product and the cost of coverage. Of course, if you make a substantial down payment on your vehicle or own it outright, you don’t need this coverage.

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GRINCHES LOVE GIFT CARDS: Gift cards can be a great gift option when you’re shopping for someone on your list who’s hard to buy for. But here’s something to be extra vigilant about this holiday season: Hackers are using a bot called GiftGhostBot to run through a store’s online gift card balance check system looking for a match — meaning a valid gift card number that has an active balance. Once the bot finds such a match, hackers use the gift card to make purchases or they sell it on the “dark web.”

A good way to avoid this scam is to use up your gift cards soon after you receive them. This leaves little opportunity for a bot to find your card in the system. Some merchants are starting to add security measures like requiring a PIN or CVV in order to redeem a gift card.

Another popular scam this holiday season goes like this: A thief removes a gift card from the display rack, records the number and puts the gift card back in the display. Then the scammer checks to see when the card is activated and if there is a balance on it. As soon as a balance appears, the thief uses the number on the gift card to make an online purchase. This often happens before the intended recipient even receives the gift.

This scam works best with small merchants who put out only a few cards at a time. That way the likelihood of a compromised card being activated by a consumer is greater. But larger merchants who leave cards unattended are targets, too. If you must buy a gift card from a display rack, grab one near the back of the stack because scammers are usually impatient and put the tampered cards near the front so they will be purchased sooner.

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FEDEX EMAIL ALERT: A reader warned us just in time for the holidays to be on the lookout for bogus emails claiming to be from FedEx. They’ll have a subject line that says, “FedEx: Delivery Problems Notification.”

The email instructs you to click on a link to verify your physical address. The email looks legit but the logo isn’t quite right and there is no tracking number. The reader called the local FedEx office and they said they do not send unsolicited emails. Further, they said, any correspondence from FedEx would include a tracking number and a proper logo.

If in doubt, FedEx invites you to check out their customer protection center at http://www.fedex.com/us/security to learn more about protecting yourself online.

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REMEMBER: I’m on your side.

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If you have encountered a consumer issue that you have questions about or think our readers should know about, please send me an email at terridickersonadvocate@gmail.com or call me at (208) 274-4458. As The CDA Press Consumer Gal, I’m here to help. Please include your name and a phone number or email. I’m available to speak about consumerism to schools, and local and civic groups. I’m a copywriter and consumer advocate living in Coeur d’Alene.

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