Underwater means that I owe more on the car than it’s worth. I bought it at $52K with a 15K downpayment, and at this point I owe $33K on it. Carvana estimates it’s worth $30K, so if I totaled it tomorrow, my insurance company would give me $30K, but then I’d be on the hook for the other $3,000. So gap insurance takes care of that. In fact, my gap policy says that if I total a car two years old or newer, they’ll pay it off and get me a brand new one as a replacement, and if it’s older than two years, they’ll get me one a year newer.

So I’m paying $8/month for the peace of mind that I don’t have to worry about out owing money in the case of a crash.

Obviously when I bought the car, I wasn’t expecting Tesla to drop the price so much and crater the used market