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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.
Standard auto insurance policies are designed to only cover the current market value of a vehicle when a claim is made. And that value depreciates over time. That's where gap insurance comes in ...
GAP coverage is mainly used on new and used small vehicles (cars and trucks) and heavy trucks. Some financing companies and lease contracts require it. [2] GAP insurance covers the amount on a loan that is the difference between the amount owed and the amount covered by another insurance policy. [1] Some GAP policies also cover the deductible. [3]
Gap insurance is optional car insurance endorsement that covers the “gap” between the amount owed on a vehicle and its actual cash value (ACV) in the event it is totaled, stolen or rendered a ...
In many instances, this insurance will also pay the deductible on the primary insurance policy. These policies are often offered at auto dealerships as a comparatively low cost add-on to the car loan that provides coverage for the duration of the loan. GAP Insurance does not always pay off the full loan value however.
Secondly, gap insurance is not new car replacement insurance. It may help you pay off an existing car loan, but it does not provide the full funds to replace a totaled vehicle with a new version.
The Insurance Information Institute says it's a good idea to consider buying gap insurance if you bought a car or truck with less than a 20% down payment, you financed the vehicle for 60 months or ...
Vehicle insurance (also known as car insurance, motor insurance, or auto insurance) is insurance for cars, trucks, motorcycles, and other road vehicles. Its primary use is to provide financial protection against physical damage or bodily injury resulting from traffic collisions and against liability that could also arise from incidents in a ...
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