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In this example, gap insurance will pay that $5,000 difference so you don't have to. However, what's considered a "total loss" varies by state and by auto insurance provider. When to get gap insurance
You still owe $18,000 on your auto loan, but the vehicle is now worth only $15,000. Gap insurance would cover the $3,000 difference between what you owe on your car and its current market value ...
Guaranteed asset protection (GAP) insurance is designed to pay the difference between the actual cash value of a vehicle (after it is damaged or totaled) and the balance still owed on the financing.
Gap insurance can help prevent steep out-of-pocket costs in instances like these. However, in California, gap coverage is often only available for newer vehicles and drivers with significant ...
Guaranteed asset protection insurance (or GAP Insurance) is an insurance coverage offered as a supplement to automobile insurance policies or auto loans. A GAP policy covers the difference between the value of a car (i.e., what the insurance company will typically pay) and what the borrower owes on the loan if the car is totaled or stolen.
GAP insurance is often paid upfront and the purchaser is usually entitled to a refund of the unused portion of the premium if the vehicle is sold or refinanced before the end of the loan term. [4] There are two ways of getting GAP coverage. The first type is an insurance policy sold by a broker. The second type is a waiver agreement sold by a ...
Loan/lease payoff coverage, also known as GAP coverage or GAP insurance, [15] [16] was established in the early 1980s to provide protection to consumers based upon buying and market trends. Due to the sharp decline in value immediately following purchase, there is generally a period in which the amount owed on the car loan exceeds the value of ...
Gap insurance: Covers the difference between the insurance payout and your remaining loan balance if your financed car is stolen or declared a total loss while you still owe more than it’s worth.