What Is Gap Insurance On A Car

Gap insurance is an optional type of car insurance coverage that provides supplemental coverage for the difference between the actual cash value acv of your car and the amount you owe your lender or leasing company at the time of a claim in order to give you enough money to cover the gap between what is owed for the car and what the insurance company pays out in the event of an accident or loss.

What is gap insurance on a car. Gap insurance is the coverage that will pay the gap between what the car is worth and what you owe. Standard car insurance only covers the cash value. This guide explains the basics of gap or guaranteed asset protection insurance to give it its formal. The usual pitch is cloaked in terms of urgency but the underlying narrative tells a much different story.

You choose the car you want to purchase get the finance agreement pitch and then move to discussing extras like gap insurance. Gap insurance protects you against loss if the value of your vehicle is less than what you owe on your loan. Standard car insurance does not pay what you owe on a car. Fca firm reference no.

Gap insurance covers the difference the gap between what your vehicle is worth and how much you owe on the car. Gap insurance often flogged by pushy car salesmen covers the difference between the amount you paid for your car and the amount an insurance company would give you if it was written off or stolen. Furthermore car insurance requirements vary from state to state so you really need to talk to an insurance company to understand the bare minimum of. To understand what gap car insurance is and how it works its important to understand car insurance and car financing.

Guaranteed asset protection gap insurance also known as gaps was established in the north american financial industrygap insurance protects the borrower if the car is totaled by paying the remaining difference between the actual cash value of a vehicle and the balance still owed on the financing. Car insurance is complicated because different types of insurance cover different problems. Car loans and gap insurance. Gap insurance comes into play if your car is stolen or totaled damaged to the point that repair would cost more than the car is worth before the car is paid off.