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GAP Insurance

Gap Insurance, or Guaranteed Asset Protection Insurance, is designed to protect you financially if your vehicle is totaled or stolen and you owe more on your loan or lease than the vehicle's current market value. Here's how it works:

  1. Understanding the Gap: When you buy a new car, its value depreciates quickly, especially in the first few years. If your car is totaled or stolen during this time, your insurance company will typically only pay you the current market value of the car, which may be less than what you still owe on your auto loan or lease.
  2. Coverage: Gap insurance covers the difference, or the "gap," between what you owe on your loan or lease and the actual cash value (ACV) of your car. This ensures that you're not left with a significant financial burden if your car is declared a total loss.
  3. How it Pays: If your car is totaled or stolen, your primary auto insurance will pay you the current market value of the car, minus any deductible. Then, your gap insurance coverage kicks in and covers the difference between the insurance payout and the remaining balance on your loan or lease.
  4. When You Need It: Gap insurance is typically recommended if you're financing a car with a low down payment, if you're leasing a vehicle, or if you're buying a car that depreciates quickly. These situations can increase the likelihood of owing more on your loan or lease than the car is worth.
  5. Cost and Availability: Gap insurance can be purchased through your auto insurance company, while the dealership and finance companies also offer this coverage it is generally less when you buy dirclty though your auto insurance company. The cost varies depending on factors such as the value of your car, the length of your loan or lease, and the provider you choose. Overall, gap insurance provides valuable protection against financial loss in the event of a total loss or theft of your vehicle, ensuring that you're not left paying off a loan for a car you no longer have. If you have any questions regarding Gap insurance or any other types of insurance please contract us at your convenience