How does gap insurance work?

Answer 1

GAP insurance rarely works at all. In my decades as an Insurance Agent, I've only ever seen one person who successfully got a pay out from a GAP insurance policy and that was only because she sued them to get it. GAP Insurance is a scam and in my opinion should be outlawed along with all those prepaid legal scams. I have never known of a single Insurance Agent who sells GAP Insurance. It is usually sold by the Car Dealerships, The Finance officer at the dealership typically gets a 300 dollar bonus if he convinces you to buy it. It is being sold to the public by auto dealerships, Nough Said.

Answer: GAP insurance is additional car insurance you can get that covers amounts not covered by typical auto insurance providers. For example, when you purchase a car, its value automatically starts to decrease. If you get in an accident where the car is totaled, the insurance company will only pay the current blue book value of the car. However, you might owe more than the current value, leaving you with a few thousand dollars to cover on your own. GAP insurance will cover the remaining amount you owe and often times also the deductible of your primary auto insurance.