No, GAP insurance covers the "gap" between what oyu owe on the vehicle, and the vehicle's current market value. This is only for upside down loans. For example, you owe $20,000 on a car but it's only worth $15,000 and you total it, the insurance will only pay the $15,000 since they only go u to current market value. Without GAP, you would be stuck with the remaining $5,000 because once you sign that contract, that loan has to be paid no matter what. GAP would take care of the $5,000 and you would be left with $0 in the end, but you wouldn't owe money on a car you can no longer drive either.
Gap insurance only pays if the vehicle is totaled in an accident or stolen and not recovered. It does not cover the deficiency balance after a repossession sale.
Gap insurance does not cover repossession anything. It only covers if you wreck the car and owe more than it is worth.
Physical damage coverage on an auto policy says that the insurance company has the option of paying to repair, replace, or pay the actual cash value of the vehicle. In the case where the damage to a vehicle's cost to repair is more than the ACV of the vehicle the vehicle is totalled and the company will pay the ACV of the vehicle. Sometimes when you buy a new vehicle without much or any downpayment you quickly get "upside down" in the loan. As the value of the car depreciates, the loan balance doesn't fall nearly as fast. For the first couple of years you owe more than the value of the vehicle. The insurance company has nothing to do with auto loan. GAP insurance was created to cover the difference in the ACV of the vehicle and the loan payoff. You can buy GAP insurance from the finance company or bank that financed the vehicle or from your insurance company. Purchasing from the insurance is much less expensive and you can drop the coverage once the loan balance falls below the value of the vehicle.
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No, GAP Insurance covers the difference between the market value of the vehicle the insurance company pays you after a total loss and what you owe to the financial institution.
No, you are misstating what GAP coverage is. GAP insurance is a separate type of insurance that you can purchase as part of your finance agreement or on your personal auto insurance. What GAP does is pay the difference in what your insurance company pays and what is actually owed on the finance account for the vehicle. This is especially important when a vehicle is newer. An auto insurance policy pays either the cost of repair, replacement of the vehicle, or actual cash value of the vehicle at the insurance companies option. If the vehicle is totaled they pay ACV which on a fairly new vehicle is less than the purchase price. Purchasing GAP insurance is usually far less expensive when purchased from your insurance company than the finance company.
It is different from regular insurance because it covers you for the difference between your car's value, and what you owe on it if you have an accident that totals the car, or the vehicle is stolen. If you are making payments on the vehicle, and you owe more than its value, your GAP insurance will cover the difference.
Gap coverage is intended to cover the difference between what the car is worth and what is owed on the car. So if you owe 15,000 on a vehicle that has a value of 12,000, you should be covered.
GAP insurance helps cover the difference if your car is deemed a total loss and is worth less than what you owe on the loan. GAP insurance only runs out when you pay down your loan enough that you have equity in the vehicle.
It will depend on the type of gap insurance you have. Finance gap insurance would expire as there is no finance to cover but return to invoice and vehicle replacement would still carry on until the end of the policy or a claim is made.
Insurance will pay to repair, replace, or pay the actual cash value of the vehicle at the option of the insurance company. On a new vehicle that is financed I always recommend that the client purchase GAP coverage. GAP coverage pays the difference in the actual cash value of the vehicle and the balance of the loan or lease payoff. This is a good idea especially in the first year or so after the vehicle is purchased. The first year a new vehicle depreciates so much that the GAP coverage can really help out. The cost of GAP insurance from you insurance company is much less than purchasing it from the dealer.
GAP Insurance is not a specific company. GAP or Guaranteed Auto Protection is a type of insurance that covers the difference between the cash value of a vehicle and the balance still owed on financing for that vehicle.