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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.
Exclusions to GAP insurance vary by country or state. Some exclusions include a maximum loss limit of $50,000 while others require a loan term of less than 84 months. [5] GAP is an optional purchase, but many states in the US require that a car dealership offer GAP at the point of purchase. Other states require insurers to offer GAP if a client ...
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.
PPI usually covers payments for a finite period, typically 12 months, in which case they might be marketed as short-term income protection insurance (STIP) policies. [2] For loans or mortgages the benefit amount may be the entire monthly payment, but for credit cards it is typically the minimum monthly payment.
Gap insurance only provides financial protection for the gap between the actual cash value of a vehicle at the time of a total loss claim and the current amount still owed on an auto loan. Total ...
For instance, by 2014 the average length of a new auto loan had reached 66 months, and the average amount financed for a new vehicle is $27,612, up $964 from 2013. [4] The longer the term of a loan and the higher the amount financed, the more likely it is that a borrower will be in a negative-equity, or “upside-down,” situation.
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