You just bought a new car, congratulations! Now, you need to protect it under a CO auto insurance policy. But because the value of your car will depreciate most in its first year, how can you get coverage for the amount you actually paid for your car, rather than its current market value?

There are two options: gap insurance or new car replacement insurance.

If you total your car, gap insurance can cover you for the difference between your car’s market value and what you owe on the vehicle. This type of coverage can help ensure that if you do total your car, you won’t be left paying off the balance of the loan and possibly unable to afford another vehicle. Remember, as soon as you sign the contract, your car depreciates in value, so the difference between the amount owing on your loan and the market value of your vehicle can be substantial.

New car replacement coverage is usually more expensive, but more comprehensive. With this type of coverage, if your new car is totaled, you can receive the purchase price of the car or the purchase price of a similar new car, so you won’t lose money because of depreciation. However, this coverage can usually only be used within a limited period after you buy a new car, so make sure you read the fine print on your CO auto insurance policy.