Mind the GAP

Question: What is GAP insurance and why it could be important to you?   

GAP insurance stands for Guaranteed Auto Protection Insurance.  When purchasing a vehicle it is important to consider purchasing GAP insurance if you are purchasing the vehicle through a finance company.  If you are involved in an accident and your vehicle is deemed a total loss, your insurance company will only pay the current market value for your vehicle, not the total amount that is owed to your finance company.  A couple great sites for determining your market value on your vehicle are NADA and Kelley Blue Book Guaranteed Auto Protection Insurance will cover the GAP in money that is still left owed to the finance company.

For Example:  Let’s say that you owe $15, 000 for your vehicle.  You were in an accident and your insurance company has deemed your vehicle a total loss. They are willing to pay $10,000, which is the figure they have calculated to be the current market value of the vehicle.  But you are still left with a GAP of $5,000 in money still owed to the finance company.  The GAP insurance will come in to effect and will cover the $5,000.00 owed to the finance company.

So when purchasing your next vehicle through a finance company, be sure to “Mind the GAP” and make sure you are covered!

By: Jennifer D. Hildreth, Case Manager, Charlotte Office