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What Is GAP Insurance?

What Is GAP Insurance?

If you’re like the majority of drivers on the road today, your vehicle is probably loaned or leased. New cars are reliable, but also pretty expensive for the average person to pay up front. Therefore, many opt to get a bank loan or lease through the dealership.

However, what happens if said vehicle is involved in a bad accident, where expenses cost more than the value of the vehicle and it’s declared a total loss? This is where GAP or Guaranteed Asset Protection insurance is a necessity because it protects you financially.

Even if you just purchased a brand new car, its value begins to depreciate as soon as you drive it off the lot.

Additionally, if you don’t have GAP insurance and your new vehicle is totaled, not only are you out of a car, but you’re also out of a huge financial loss.

Why is this?

Because regardless of what happens to the vehicle, you still owe money to the bank or dealership. So, essentially you’d be paying for a vehicle you don’t own, plus paying for a new replacement vehicle.

Moreover, this actually happened to one of our old customers. They had left to get cheaper insurance from one of our competitors, but there’s always a downside to having cheap insurance.

Inside of a car from the driver's perspective.

They actually ended up calling us and asking for advice, but there was nothing we could do because their current policy lacked GAP insurance meaning this driver not only had to pay out property damages, they also had to pay the remainder of their car loan, even though the car had been declared totaled and was no longer in their possession.  

GAP Coverage on Your Policy

Most car dealerships offer the option to get GAP coverage through them, however, you can also get it through your current auto insurance policy. This is because it’s added similarly to other endorsements on your insurance- like glass, full collision, or roadside assistance.

Total loss is an unfortunate thing that can happen to your vehicle, but at our insurance agency, we make sure you’re always protected and fully covered. Plus, we take the time to educate you on your options. Therefore, if something like this were to happen to you, you won’t be stuck with a financial burden.

So, if you’re planning to purchase a new vehicle soon, talk to your agent about GAP coverage, and protect yourself from the unexpected.

 

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