GAP, which stands for "Guaranteed Asset Protection", is insurance that helps protect the customer from having an unpaid finance balance in the event of total loss or theft of the vehicle.
Insurance companies will typically only pay the Actual Cash Value (ACV) for a vehicle in the event of total loss or theft, regardless of the finance balance. This means if the customer owes more for their vehicle then what the insurance company determines as the ACV, they will be left with an unpaid finance balance that the customer is responsible for.
Let’s say your vehicle has just been totaled because of an accident. You originally paid $26,000 and financed it for 72 months. The accident happened after 24 months of ownership. You owe $18,000 but your auto insurance says the actual cash value of your vehicle is only $10,000. The "GAP" between what you paid for your vehicle originally and what the insurance company will pay out is $8,000. If you didn’t have GAP coverage, your out of pocket expense would be $8,000. If you had GAP, the out of pocket expense would be $0.
Why GAP Insurance is for you
GAP Insurance saved me thousands of dollars! My vehicle was totaled in an accident that was not my fault. I was upside down in my vehicle because I owed more than what it was worth. But I didn’t have to worry about it because GAP insurance covered the negative equity as well as my insurance deductible. I will never buy another vehicle without GAP insurance on it.
- James Alexander
Exclusions May Apply
The information above is to provide a summary of the coverages and benefits that GAP Insurance provides. Exact terms, conditions and exclusions can be found on the GAP Insurance Contract.