What is gap auto insurance coverage?
Guaranteed Auto Protection (GAP) insurance is a way to protect a car owner who has a loan or lease on the vehicle. Understanding the purpose and benefits of GAP insurance can help an individual avoid owing on a car loan if the vehicle is totaled by an insurance company.PurposeIn the event a vehicle is totaled by the insurance company due to an accident, theft, fire, or weather damage, GAP insurance will pay the difference between the amount paid by the insurance company and the amount owed on the loan or lease.ReasonWhen a new car is purchased and financed for more than three years with little or no down payment, the owner will owe more on the car than it is worth.PurchaseGAP insurance can be purchased through a dealership, bank, credit union, or private insurance company.LimitsMost GAP insurance companies have a limit of loss of $50,000. In addition, the financed amount can be limited to $100,000 and the loan term be no longer than 84 months.TipsGAP insurance is optional and not requi
