What is Car Gap Insurance Coverage?
When a vehicle is damaged beyond repair due to an accident, theft or fire, most insurance policies will only pay for the actual value of the vehicle. Since the amount paid on a claim is the actual value of the vehicle, if a car is financed, a normal policy will not pay for the total amount still owed on the loan. That means that the car owner is responsible for the difference between the outstanding loan and the value of the vehicle. document.getElementById(‘adsense_placeholder_2’).innerHTML = document.getElementById(‘adsense_ad_2_hidden’).innerHTML; Gap insurance covers the difference between the value of the vehicle and the outstanding loan balance. As an example, let’s assume the actual value of the vehicle is $10,000 and the outstanding loan balance is $15,000, gap insurance would pay the difference or $5,000. Example of Auto Gap Insurance Coverage • outstanding loan amount $15,000 • vehicle value $10,000 • normal policy covers $10,000 • gap insurance policy covers $5,000Auto Gap I
