What is GAP Insurance?

GAP insurance (Guaranteed Asset Protection) is auto insurance to protect you from financial losses. For example, if the compensation you receive from a total loss of your vehicle is insufficient to cover the amount owed on your auto loan, GAP steps in.

How Does It Work?

When a vehicle is totaled in an accident, or stolen and not recovered, the insurance settlement is based on the actual cash value of the vehicle, not the outstanding loan balance. This could create a loan “gap.” That’s money you owe on the loan after the insurance company pays its portion. GAP covers the difference between the outstanding loan amount and the actual cash value. It also covers up to $1,000 of your deductible.

For example, if you owe $25,000 on your auto loan and your car is totaled and only worth $20,000, your GAP insurance would pay the $5,000 difference. That’s a nice benefit.

Who Is It For?

GAP covers new and used automobiles, trucks, and SUVs that are no more than eight years old. It also covers individually-titled vehicles with coverage up to 125% MSRP. GAP is not available on consolidation loans.

It’s not necessarily for everyone, but it can be a valuable asset. Whether or not GAP insurance is worth it depends on your circumstances. If you are concerned about being upside-down on your auto loan, then GAP insurance may be a good option for you. However, if you’re confident that you’ll be able to afford to pay off your auto loan if your vehicle is totaled, then you may not need GAP insurance.

How Much Does GAP Insurance Cost?

The flat enrollment fee of $499 can be financed as part of your loan. You get a full refund if canceled within 60 days of enrollment. Many car dealers charge $1000 for the same protection.

By purchasing GAP insurance, you can ensure that you are financially protected in the event of a total loss of your vehicle.

Give us a call to find out more.