Specifically, it is designed to cover the “gap” between the vehicle’s value and the amount you still owe on your loan or lease. Vehicle user interface is a product of Apple® and its terms and privacy statements apply. Siri, iPhone and Apple Music are trademarks for Apple Inc, registered in the U.S. and other countries. Vehicle user interface is a product of Google and its terms and privacy statements apply.
If the payment can be included in the vehicle loan, factor in the interest you will be paying on the extra insurance. The same interest payment situation will most likely apply wherever you choose to get a vehicle financed with gap insurance included. If your current insurer does not offer gap insurance, check with other companies, and compare quotes to determine if switching to a new insurer is beneficial. If your vehicle is financed through a credit union or bank, it is possible gap insurance is available from $200 to $700. Two things gap insurance covers are theft and the difference between the amount the car is worth and what is still owed on the loan. Minimize financial loss after a total loss with gap insurance — check out our lease/loan gap coverage and connect with an American Family Insurance agent to get the protection you deserve.
If your car were totaled tomorrow, the value listed in a source like the Kelly Blue Book doesn’t necessarily equal the reimbursement from the insurer. Still, that listing can give you a good ballpark figure to check against your loan balance. If your car got totaled tomorrow and you still owed on it, gap insurance can bring peace of mind. That means if you totaled your car, the insurance company would only cover the cost of its current value. If you owe more than the value of your car’s current market value, you’d be stuck repaying any remaining balance. Vermont’s total loss formula says an insurance company can decide when a car is totaled.
Give a call to your American Family Insurance agent about adding this coverage when adding a vehicle to your auto insurance policy — you’ll be happy you did. If your car is worth less money than you owe on its loan, gap insurance is a smart choice. One good way to analyze whether gap insurance coverage is a good fit is to determine your car’s current bluebook value at the time of purchase.
What Are Alternatives To Gap Insurance?
Other insurers sell gap insurance or comparable products as part of a lease or auto loan. You can purchase gap insurance from State Farm if you are financed directly through their bank, but you can not get a regular auto policy this way. For example, if your car is currently worth $10,000 and you owe $12,000 on the loan, you might be willing to absorb the difference if your car is totaled. But if you have a $30,000 car loan on a $22,000 car, you might not be able to afford to pay the $8,000 gap. Under the Massachusetts total loss formula, an auto insurance company decides if a vehicle is totaled. Hawaii’s total loss formula says an auto insurance company can decide if a vehicle is totaled.
Generally, new cars depreciate 30.5% in their first year.2Your standardcomprehensive insuranceandcollision insurancecoverage help pay to replace your car from a covered loss. However, they only pay up to the limits of the policy and your car’s ACV. To learn more about gap insurance or other car coverage, you can get anauto insurance quotefrom us today.
If it is true, the cost of the GAP insurance must be included in the finance charge and reflected in the disclosed annual percentage rate . GAP insurance can be excluded from the finance charge and APR if it is optional. If you have a complaint or a concern about this insurance product, you can contact your state insurance department or commissioner. You can get GAP insurance if you only paid a small down payment on your car loan, thus increasing the amount owed on the vehicle. A car is totaled in New Hampshire when damage exceeds 75% of its fair market value or that an insurer decides is “physically or economically impractical to repair” for a claim settlement.
Whoever leases the car to you normally requires that you carry comprehensive and collision coverage for the vehicle. Since you’re a responsible driver, you probably have collision coverage, which is what will cover the cost to replace your totaled car. Loan or lease payoff insurance is a gap insurance alternative that may be available for used cars.
Coverage options, limits, discounts, deductibles, and other features are subject to underwriting criteria, state availability, and effective dates. Coverage provided and underwritten by NJM Insurance Company and its subsidiaries, 301 Sullivan Way, W. Trenton, NJ 08628. In that case, GAP insurance would be something that you may want to consider purchasing. You could also live in an area where automobiles are often damaged by falling branches or are likely to be stolen.
When You Don’t Need Gap
The average interest rate for a new car is almost 6%, according to Edmunds. That means you could pay over $800 for three years of gap coverage from a dealer compared with $60 from your auto insurer. Gap insurance is a good way to add more protection to your auto insurance policy. But before we dive into whether gap insurance is right for you, it’s important to have an understanding of gap insurance’s definition. Even in the event of an accident covered by your gap insurance policy, you would still have to pay your deductible.
If your car is totaled, gap insurance will cover the difference between your car’s actual value and the money you still owe on a car loan. USAA offers gap coverage as well as auto replacement assistance. Like gap coverage, auto replacement assistance kicks in after your vehicle has been totaled. This car insurance coverage will help to pay for the cost of a replacement vehicle that is similar or newer than your wrecked vehicle. As an example of gap insurance at work, consider John’s car, which is worth $15,000.
If your car gets stolen or totaled in an accident covered by your car insurance policy, you’ll make a claim on either the collision or comprehensive insurance portion of your policy. To estimate your car’s worth, you need to look up the Kelley Blue Book or National Automobile Dealers Association value on your car. You can then compare it against the current balance on your auto loan or lease. Be sure to account for the deductible you’ll pay in the event of a crash or theft. Gap insurance isn’t required by any insurer or state, but some leasing companies may require you to purchase it.
Autonation Com Is Temporarily Unavailable.
Guaranteed Auto Protection covers the difference between the actual cash value of your vehicle and the loan/lease balance as of date of loss. Travelers calls it “loan/lease gap insurance.” You must be the vehicle’s original owner, and you must buy the car from a new car dealer to be eligible for the coverage. Typical deductibles are $500 or $1,000, and that’s a nice chunk of change to save. Rarely, you’ll find a company like Allstate who covers the deductible too, but most don’t. You can expect to dish out about $5 a month or $60 a year on top of your standard car insurance. Fox Business says the dealership can charge up to $500 to $700 a year.
So, it pays to shop around a bit, starting with your current auto insurer. Many insurers will allow you to add gap insurance to your existing auto insurance policy. You can get gap insurance from a few places — primarily the dealership or lender that is financing your car, or directly from an auto insurance provider. Gap coverage is typically more expensive if you get it from the dealership or lender versus adding it to your car insurance policy. Your car dealer may offer to sell you gap insurance on your new vehicle. However, most car insurers also offer it, and they typically charge less than the dealer.
All Learning Center articles are general summaries that can be used when considering your financial future at various life stages. The information presented is for educational purposes and is meant to supplement other information specific to your situation. It is not intended as investment advice and does not necessarily represent the opinion of Protective Life or its subsidiaries. Bring your Auto Loan to First Entertainment CU by August 31, 2021 and lower your current payment. Whether or not you purchase GAP will not affect your application for credit or the terms of any existing credit agreement you have with First Entertainment Credit Union. There are eligibility requirements, conditions, and exclusions that could prevent you from receiving benefits under GAP.
The availability, qualifications, and amounts of coverages, costs and discounts may vary from state to state and there may be coverages and discounts not listed here. In addition, other terms, conditions, and exclusions not described above may apply, and total savings may vary depending on the coverages purchased. For more information regarding your eligibility for certain coverages and savings opportunities, please contact your AAA agent.
And the coverage works regardless of fault in an accident. At the time of the wreck, if the book value of your car is $25,000, your insurance company will only pay the current value first auto insurance of the auto — $25,000. Most often, car buyers purchase gap coverage through the lender financing their purchase, though insurance companies and online vendors offer it, too.
Your deductible is usually not covered by gap insurance, but some plans do cover the deductible, so be sure to check with your provider. Having gap insurance eliminates this deficit, since your insurance company will also pay that gap of $3,000. Progressive calls it “loan/lease payoff,” but it is gap insurance. It covers up to 25 percent of the actual cash value of your car.
Our finance team is here to help you with your gap insurance price questions and any other insurance issues you might have. Contact us with your questions, and keep reading to learn more about the average cost of gap insurance. Most advocacy groups discourage purchasing gap insurance from a dealership, as it typically includes an extensive markup price. CarInsurance.com states that the average markup cost on gap cheap auto insurance california insurance from dealerships is approximately 150 percent, although in some instances it’s much higher. A study conducted by the National Consumer Law Center found that 38 dealerships hiked the price by an average of 300 percent. Major insurance companies that offer gap policies in many states include Travelers Insurance, Safeco, Nationwide Insurance, Liberty Mutual, Auto-Owners Insurance, and American Family.
But our editorial integrity ensures our experts’ opinions aren’t influenced by compensation. This option is added to your loan payments, resulting in more interest and is the most expensive choice. USAA insurance is available to military members and their families. Its “Total Loss Protection” is for vehicles less than seven years old and loans with a balance higher than $5000. USAA also reimburses a maximum of $1000 for your deductible. Of course, the offers on our platform don’t represent all financial products out there, but our goal is to show you as many great options as we can.
While some dealers offer gap insurance for both leased and financed cars, you may end up paying interest on your gap coverage due to the bundled lease/loan payment. Buying gap insurance through your auto insurer can be a smarter option. Once you add gap insurance, it applies for the duration of your policy. However, you won’t need gap coverage for the entire length of the loan.
Offer pros and cons are determined by our editorial team, based on independent research. The banks, lenders, and credit card companies are not responsible for any content posted on this site and do not endorse or guarantee any reviews. While maintained for your information, archived posts may not reflect current Experian policy. The Ask Experian team cannot respond to each question individually. However, if your question is of interest to a wide audience of consumers, the Experian team will include it in a future post.
You can’t have too much coverage when driving on New Jersey roadways. Simply put, gap insurance covers the “gap” between the amount you still owe to your auto lender and the actual cash value of your vehicle if it’s totaled in an accident or stolen. For example, if your car is assessed at $16,000 but you still owe $20,000, your gap insurance will cover the $4000 difference.
While lenders do require comprehensive and collision coverage, GAP insurance isn’t usually needed. If your bank insists you buy it, check your sales contract. Unless noted in writing, your loan provider can’t require you to purchase the added coverage. Because most of your payments went toward interest, you’re left owing more than the car is worth, even after your standard policy pays. Add the cost of depreciation, and you’ll find yourself owing the balance in cash.
For example, you are in an accident and are not found at fault – but your car is totaled. You still owe $13,000 on the auto loan at the time of the accident, but your car’s ACV is only $10,000. After just a year, the ACV of your car can be thousands less than what you paid for it, which can leave you with an expensive loan or lease balance. Nationwide’s gap insurance may cover some, or all, of that amount. This coverage is available in select states and applies to vehicles 6 years old or less.
If you add GAP coverage to your collision and comprehensive auto insurance policy, your premiums may be as low as $20 per year, according to the III. Gap insurance is extra important for those leasing a car, and that’s why a lot of leasing contracts include gap insurance by default. Before you purchase gap insurance, check to see if it’s already included by either the leasing company, dealership, or the car leasing insurance company. Stand-alone companies and dealerships make you pay up front, and the dealership could roll gap insurance into your loan, meaning it will cost interest, too. It’s often cheapest for the consumer to get gap and car insurance from the same company. Before you buy gap protection, make sure you’re not already covered.
Can you add gap insurance anytime?
Yes, you can buy gap insurance at any time before a car loan or lease is paid off but only from some gap insurance providers, as others will only sell coverage to the first owner of a car with a recent model year.
Even if you have full coverage car insurance, you’ll still want to consider gap insurance, especially if you have a car lease or loan. The car dealership will usually offer gap insurance for lease vehicles. You also have the option to buy gap insurance from your auto insurance company, usually within 30 days of purchasing your new car.
In the event of an accident, extended warranties will not cover the cost to pay off your loan if it’s more than your vehicle is worth. Gap insurance covers you, so you don’t have to pay out of pocket if your vehicle is totaled. For many drivers, a standard auto insurance policy provides enough protection to cover the cost of repairs or replacement amtex auto insurance houston tx if their car is damaged or stolen. However, if you total your car and the car’s actual cash value is lower than the amount you owe on your loan balance or lease, that difference, or “gap,” is not covered by insurance. Your insurance company won’t pay out more than the car is worth —so you will be responsible for paying that amount.
Certain features require a SiriusXM subscription and the Chevrolet Connected Access plan. See siriusxm.com and onstar.com for details and limitations. The Manufacturer’s Suggested Retail Price excludes destination freight charge, tax, title, license, dealer fees and optional equipment. Click here to see all Chevrolet vehicles’ destination freight charges. Coverage is fully refundable within 60 days, as long as no loss has occurred. For cancellations after 60 days, a pro rata refund will be given, less any applicable cancellation fee.
It also covers negative equity, which is the gap between what you owe on the loan and the ACV. If you disagree with the actual cash value as established by the insurance company, you may have to file a lawsuit to claim a higher settlement. Protecting your vehicle if stolen or totaled can also be provided by a loan/lease payoff, which differs from gap insurance. According to NerdWallet, a lender has the option to charge a flat fee for gap insurance that can range between $500 to $700. For cars that are financed through a credit union, gap insurance may be less expensive.
You should carefully read your contract for a full explanation of the terms. All vehicles the primary borrower owns (i.e., titled or registered) and insures are eligible for coverage. If the loan is joint, the co-borrower is not eligible for the ADR benefit. Members go auto insurance phone number automatically enrolled at no cost when GAP policy is purchased. Enjoy more flexible EasyPay automatic payment options, including selecting a withdrawal date that works best for you. This will not be the case if you are viewing your online current statement.
It's a question about auto GAP insurance, and she's talking a lot about the part where Neil Patrick Harris borrows a car and crashes it.
Readers, you'll be surprised to hear that I have seen "Harold and Kumar Go to White Castle." pic.twitter.com/wGE4CSIlH5
— Evan Weinberger (@reporterev) March 10, 2020
Use a GAP insurance cost calculator to determine if you can afford the extra coverage when you’re calculating a car payment. GAP may not be available on finance and lease contracts in some states. Please discuss with your dealer and refer to your agreement at time of purchase. See your auto insurance policy for actual coverage in the event of a total loss. It’s as important to carry gap insurance on a leased vehicle as on any other financed car.
GAP insurance helps cancel the difference between the primary insurance settlement and what you might still owe on the loan. Depending on your vehicle’s model year, you might be able to acquire gap insurance after you purchase it. Many insurers offer this type of insurance as part of their policies.
Should you buy GAP insurance? It's one of the first questions you'll have to answer after securing an auto loan. Learn exactly what GAP insurance is and whether or not it's worth the price in our latest blog: https://t.co/TVMrj7UhXs. #autoloan #gapinsurance
— Generations FCU (@generationsfcu) December 4, 2019
There are also stand-alone policies from third-party companies marketed between $200 and $300. It can be a no-brainer if you owe a lot more than what the car’s worth. Be sure you understand what is covered and not covered before you purchase GAP. To become familiar with automobile insurance terms and coverage, clickherefor a booklet on auto insurance published by the Arkansas Insurance Department.
When should I file a gap insurance claim?
If there is an outstanding payoff balance after your auto insurance carrier provides its settlement, you must file a GAP claim to receive a GAP benefit. Filing a GAP claim is voluntary and not required if there is not an outstanding payoff balance. You may, however, want to cancel your GAP coverage at that time.
If you believe you’ll need help purchasing a new vehicle if you total your old one, consider buying new car replacement coverage. Gap insurance coverage applies if you owe more than what the vehicle is worth when it’s involved in an accident or totaled. When a vehicle is totaled, it means the repair costs exceed the vehicle’s value. According to the Insurance Information Institute , driving a brand-new vehicle off the lot decreases its value immediately. Most vehicles depreciate approximately 20 percent in their first year.
The end result was an overall rating for each provider, with the insurers that scored the most points topping the list. Vehicles that are older are typically not eligible for gap insurance coverage. Specific requirements vary by insurer, but usually, any vehicle more than three model years old is not eligible for gap insurance coverage. If John purchases gap insurance, the gap insurance policy would cover the $5,000 “gap,” or the difference between the money received from reimbursement and the amount still owed on the car.
The option typically costs between $500 and $700 once you factor in the interest charged during the loan, according to Allstate. His auto insurance company settlement, based on his vehicle’s market value at time of loss, is $11,000. Less any delinquent payments, amounts due to pre-existing damage, taxes, auto insurance deductibles amounts over $1000, if applicable, and past-due charges. When you call your insurance company and it offers you loan/lease coverage, it might be referring to gap insurance. Ask the agent to describe the specifics of the coverage and how it can apply to you. Car insurance reimbursement goes directly to the lender to pay off a vehicle that’s no longer drivable.
It will also not help buy you another vehicle — you would need new car replacement coverage to cover the expenses of a new vehicle. You may still be asking yourself – is gap insurance worth it? Not having gap insurance if you are “upside down” on your car loan could mean you are reimbursed for thousands less in the event of a complete loss.
Most insurance companies total a vehicle when the repair estimate comes in at more than 75 percent of the car’s actual cash value. Bankrate points out that if your insurance provider offers gap insurance, they’ll factor in your car’s actual cash value, your location, age, and auto insurance claim history. These details will determine how much you have to pay for gap insurance. Dealerships tend to charge the most for gap insurance coverage. The cost can range in the area of $400 to $700 with the payment due upfront.
While gap insurance isn’t typically required, a policy can be a lifesaver in certain situations. Buying gap insurance coverage may be required by your lender. Typically, auto dealerships purchase what’s known as a “master policy” from an insurance company that provides blanket coverage for all of its leased vehicles.
Remember, any add-on product that you finance costs you not just the upfront cost but also the cost of the interest when you pay for this product over the life of the loan. Vehicle user interface is a product of Google, and its terms and privacy statements apply. Requires the Android Auto app on Google Play and a compatible Android™ smartphone. You can check which smartphones are compatible atg.co/androidauto/requirements. Vehicle user interface is a product of Apple and its terms and privacy statements apply. Apple CarPlay, iPhone, Siri and Apple Music are trademarks of Apple Inc., registered in the U.S. and other countries.
We offer auto insurance, as well, through Truliant Insurance Services. This additional coverage to your policy adds only a few more dollars to your premium — but it could save you a lot of money in the long run. Your insurance agent can tell you just how this coverage will affect your premium, and they can help you better understand the right time to remove it. Keep in mind, some car dealerships offer this coverage at the time of sale, and you can purchase it at the time you add your vehicle with American Family Insurance. Whether you leased or bought it, a brand-new car is something to celebrate!
Now, imagine four months later you get into an accident and your car is totaled. Your insurance company decides the actual cash value of your vehicle, or the fair market value, is $26,000. They’ll pay this much through your collision coverage on your insurance policy. Yes, you don’t have to buy gap insurance at the dealership.
All refunds will be made to the financial institution/lender. Your new 2020 Chevrolet vehicle comes with a standard 3-year/36,000-mile limited warranty. You have the option to extend it to 5 years/60,000 miles with the purchase of Chevrolet Extended Limited Warranty.
However, if you have a 60-month loan, gap insurance protects you when your loan balance to exceed your vehicle’s Actual Cash Value. In most cases, you can get gap insurance only if you have comprehensive or collision coverage on your car. Most lenders require borrowers to have comprehensive and collision insurance, to cover the costs to repair or replace your car. Lenders do this because they want to ensure nothing keeps you from making on-time payments. You’ll also need to get comprehensive and collision coverage when you buy gap insurance. Progressive offers loan/lease payoff coverage for only $5 a month on average.
If a leased vehicle is totaled, lease gap insurance covers the difference between its value and the amount still owed on the lease agreement. Just as the driver of a leased car must carry standard auto insurance, it makes sense to carry gap coverage. If you paid for your car with cash, it’s probably not worthwhile to get gap insurance. And if you made a significant down payment on your car loan, standard car insurance coverage may be enough to pay off the remaining balance on your car if it’s stolen or totaled.
Four months later, you owe $25,000 on the loan and your car gets totaled in an accident. Your insurer estimates the car’s market value and only pays you $22,000 for your loss. That means you have a $3,000 difference or GAP between how much you owe on the loan and the amount you received from your insurance carrier.
In other words, if the “gap” reimbursement amount is $4,000 and your deductible is $500, your total reimbursement amount would be $3,500. A car’s actual cash value is the car’s monetary value at the time of the accident, not the car’s original price. Most dealers — and some banks — offer some type of GAP insurance as part of the vehicle loan, but rates and coverage can vary considerably.
In this case — because the car has been on the road for a year — the value has fallen to $32,000. Insurance offers people one more way to protect themselves against financial loss, and that includes gap insurance. When a totaled car is worth less than what is owed, car gap insurance fills the void, saving the driver what may be a huge out-of-pocket expense.
- Premium balance is the amount of premium that is owed to an insurer for a policy, but which has not yet been paid by the policyholder.
- If the driver has gap insurance, that means that the insurer will pay the entire $35,000.
- Coverage is fully refundable within 60 days, as long as no loss has occurred.
- Your car insurance company will pay the value of your car in a total loss settlement, not what you owe on a car loan or lease.
- Imagine you bought a brand-new car that cost $25,000, and you now owe $20,000.
Several weeks later, while driving, he swerved to avoid hitting a deer and the vehicle rolled into a ditch. The insurance company decided the car was totaled and determined the actual cash value, or the vehicle’s replacement cost minus its depreciation, was $25,000. Add GAP coverage to your Chartway loans and protect against the financial pressures that come from loss of life, disability, or involuntary unemployment. There’s even loan protection for vehicle repairs and replacement.
But what if your car was one of the models that don’t hold their value as well? For instance, say it’s depreciated by 30% since you purchased it. And you still need a new car, which is where having car gap insurance becomes important.
A car dealer, finance agency, auto insurer or your Credit Union are just a few places to get GAP coverage. Policy requirements may differ from business to business, so total costs vary. However, this type of protection generally doesn’t add much to your lease or finance payment, nor to your auto insurance payment, depending on where you buy your policy.
While gap insurance isn’t required by law, you’ll want to checkstate car insurancerequirements to learn about other required coverages for your area. Gap insurance is only available if you’re the original loan or leaseholder on a new vehicle. Your car must be new and not previously owned or titled to be eligible to purchase gap insurance. To make sure you’re covered, buy gap insurance right away when leasing or financing a new vehicle.
If you’re financing or leasing your vehicle and it’s stolen or totaled, depreciation can pose potential issues. In fact, GAP insurance may be mandatory if you don’t own your vehicle yet. Many dealerships and financial institutions require you to carry GAP insurance if you finance a vehicle. That’s because this additional protection goes both ways, ensuring that you can pay off your loan or lease and helping you avoid financial difficulties after a theft or accident.
Requires the Android Auto app on Google Play and an Android compatible smartphone running Android 5.0 or higher. Android, Android Auto, Google, Google Play and other marks are trademarks of Google LLC. Requires the Android Auto app on Google Play and an Android compatible smartphone running Android™ 5.0 or higher. Requires the Android Auto app on Google Play and an Android compatible smartphone running Android 5.0 Lollipop or higher. You expect to pay off your car loan in less than five years. If you have enough money not to care about the “gap,” you may decide to skip the gap insurance.
With just a few clicks you can look up the GEICO Insurance Agency partner your General Liability Policy is with to find policy service options and contact information. With just a few clicks you can look up the GEICO Insurance Agency partner your Business Owners Policy is with to find policy service options and contact information. Our experienced agents can help you with any paperwork and to manage your policy. Call us if you have any questions about this valuable coverage. Before you buy a vehicle or use it for trailering, carefully review the trailering section of the Owner’s Manual. The weight of passengers, cargo and options or accessories may reduce the amount you can tow.
For example, let’s say you buy a brand-new car for $35,000. We know that the moment you drive it off the lot, the value drops. If you are in an accident, your auto insurance will pay the replacement cost of the vehicle, or $27,000. The policy specifies that they must fulfill the obligation of replacement at current market value.
When you buy or lease a new car or truck, the vehicle starts to depreciate in value the moment it leaves the car lot. In fact, most cars lose 20 percent of their value within a year. Standard auto insurance policies cover the depreciated value of a car—in other words, a standard policy pays the current market value of the vehicle at the time of a claim. You might think that your auto insurance provides all the protection that you may need if your vehicle is totaled or stolen and not recovered. If you decide gap insurance is no longer of value to you, contact your insurer to cancel the policy.
While getting the best deal on gap insurance, why not do the same for your car insurance? You should check a website that collects quotes from the auto insurance companies available in your area. Find a car insurance comparison tool like Insurify to compare up to 10+ real quotes for your combined driver profile and unlock savings and car insurance discounts. Rates can vary based on your driving history and personal profile, but you should be able to find a competitive price. Insurify provides the cheapest car insurance quotes from local companies in just a few minutes. Be sure to get quotes before deciding which company to purchase coverage from, if you want the added protection.
When your loan amount is more than your vehicle is worth, gap insurance coverage pays the difference. For example, if you owe $25,000 on your loan and your car is only worth $20,000, your policy’s loan/lease payoff coverage covers the $5,000 gap, minus your deductible. GAP Insurance also known as guaranteed asset protection insurance covers the difference between your loan amount and the value of your vehicle after depreciation. Gap insurance is an optional car insurance coverage that helps pay off your auto loan if your car is totaled or stolen and you owe more than the car’s depreciated value. GAP insurance covers the amount on a loan that is the difference between the amount owed and the amount covered by another insurance policy.
If the insurer suspects the driver of hiding the car somewhere and denies the claim, gap will not pay out. Gap coverage does not just protect the driver against car accidents. If a car is stolen, burned in a fire, thrown across a field in a tornado, or in any other way totaled, car gap insurance fills the void between what is owed and how much the vehicle is worth.