Explanation and Benefits: What is GAP Insurance?
Many people are unfamiliar with the ins and outs of GAP insurance. Essentially, if you are involved in an accident and you still have an auto loan, then you could potentially pay a large amount of money for a vehicle you no longer drive That's where GAP insurance comes into play.
What Does GAP Insurance Stand For?The "GAP" in GAP Insurance stands for "Guaranteed Auto Protection".
It may seem confusing at first, but this insurance can protect you from paying out the difference between the amount you owe on a vehicle and the vehicle's current estimated value following an accident. People often assume that after a vehicle is involved in an accident, collision insurance will handle any expenses. Wrong.
What Does GAP Insurance Cover?
Collision and comprehensive insurance plans will usually cover the vehicle up to its estimated worth at the time of the accident. Due to the rapid depreciation of vehicles, this difference between the insurance company's value of your vehicle and the amount you still owe can be significant. GAP insurance covers the financial difference between the amount an insurance carrier will pay for an accident and the amount you still owe.
There are limits on the exact dollar amount that GAP insurance will cover, but you can discuss those details with your insurance provider. We're here to help answer any questions you may have about GAP insurance requirements for new leases or purchases. Contact us today by filling out the form on this page.