What is Gap Insurance?
What is Gap Insurance?
GAP insurance can provide valuable protection during the life of your car loan.
If a loss occurs, GAP insurance will pay the difference between the actual cash value of the vehicle and the current outstanding balance on your loan or lease. Gap Insurance protects your vehicle lease or loan. Sometimes it will also pay your regular insurance deductible.
If your vehicle has been totaled by accident, theft, fire, flood, tornado, vandalism, or hurricanes your insurance company typically pays the actual cash value. That may be less than its actual retail value. It may be considerably less than the amount you still owe on your loan or the amount due for a lease payoff.
The difference between the actual cash value and your loan balance is the "GAP" being insured by the "GAP Insurance."
HOW GAP WORKS:
(for illustration only)
| Balance on finance contract: | $25,000 |
| Actual cash value of vehicle as determined by
your primary insurance company: |
$15,000 |
| Less your insurance deductible: | $1,000 |
| Insurance company's payment to you: | $14,000 |
| Leaves you with a GAP of: | $11,000 |
CUSTOMERS BENEFITS:
- Helps prevent potentially crippling financial obligations
- GAP payments can be made as part of your monthly payment
- Available on both new and used vehicles
- Waives most or all of a remaining net principle balance including a deductible up to $1,000 (where available).
