Explained: What Is GAP Insurance?

Not everyone understands exactly what happens when you get into a car accident when you still owe money on your vehicle. Comparing a vehicle's estimated value and the amount and insurance company will pay can be perplexing and frustrating. GAP insurance was invented to help with the confusion and frustration that can accompany an auto accident.

What Does GAP Insurance Stand For?

The "GAP" in GAP Insurance stands for "Guaranteed Auto Protection".

If you're under the impression that your current comprehensive and collision insurance will cover the entire cost of your remaining loan on your vehicle following an accident, you might be mistaken. Many insurance providers build GAP insurance into their policies, but not all of them.

What Does GAP Insurance Cover?

GAP insurance can cover the difference between the vehicle's estimated value at the time of the incident and the remaining balance left of the loan. In many cases, this can be a significant sum of money, depending on the rate of depreciation in value vs. the remaining balance on the loan.

There are some limits on exactly how much GAP insurance will pay, but all of those details can be discussed with an 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.

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