What is GAP Insurance – All You Need To Know

”Gap insurance provides financial protection, ensuring the owner is not burdened with paying for a vehicle they no longer possess.”

We all have heard many stories of car thefts. Unfortunately it can happen to anyone. If unfortunately or with bad luck your car is stolen and you still have to pay a big chunk of the amount for your car’s lease or loan. You might be wondering how you’ll recover financially. This is where Assured auto protection insurance steps in. To get you out of this mess and financial crisis.

In this blog post, we’ll delve into the world of gap insurance. How it works specifically when a car is stolen. Learn how you can claim your vehicle depreciation coverage. We’ll provide you all the necessary information about this often misunderstood aspect of car insurance.

Key points

  • Gap insurance is Guaranteed Asset Protection insurance.
  • If you have Guaranteed Asset Protection insurance and your car is stolen. Insurance company will pay the rest of your lease or loan of your car.
  • GAP insurance will not work if you’ve purchased the car.

What is Gap Insurance?

By listening to this word I’ve never been able to understand what it means. Every time I listen to this word it comes to my mind that we are talking about distance between two things. Just kidding 😅. Let’s get back to serious mode.  

Gap insurance, also known as Guaranteed Asset Protection. It’s an optional type of car insurance. Which covers the difference between the actual cash value of your vehicle and the amount you still owe on your auto loan or lease. 

Suppose you’ve loaned a car for 4 years. After two years your car got stolen. If you have a Guaranteed Car Protection insurance from your insurance company. The insurance company will pay the rest of your loan. So you don’t have to pay for a car you don’t have anymore.

Importance of Guaranteed Asset Protection Insurance

Guaranteed Asset Protection Insurance can provide you financial protection and peace of mind. It is especially for those who have substantial outstanding balances on their loans or leases.

Auto Loan Gap Insurance

Let’s say if you have a car that is financed through an auto loan, having Guaranteed Auto Protection insurance is highly recommended. When your car is stolen, the insurance payout from your primary auto insurance policy is based on the actual  cash value of the vehicle at the time of theft.

However, if the amount you owe on your loan exceeds the car’s value. You would still be responsible for the remaining balance. This is where auto loan Upside-Down Car Insurance steps in. It covers the difference between the insurance payout and the outstanding loan balance. So you’re not left with a significant debt to repay.

Lease Gap Waiver

Alright for those people who have leased a vehicle, lease Protected Asset Guaranty insurance provides similar protection. When a leased car is stolen, the leasing company typically expects you to pay the remaining lease payments and potentially the car’s depreciation value. Lease Auto Finance Gap Protection covers these costs, preventing you from being financially responsible for the stolen vehicle. With auto finance gap protection, you can avoid significant financial strain and potential legal consequences associated with early lease termination due to theft.

Why is Vehicle Replacement Coverage Better?

Some Loan Balance Coverage policies also offer vehicle replacement coverage. This is very beneficial for you if you’ve purchased a brand-new vehicle.

Vehicle replacement coverage provides the necessary funds to replace your stolen car with a brand-new equivalent model. It allows you to get back on the road with a similar or identical vehicle, minimizing the disruption caused by theft.

How can you Claim Gap Coverage for Stolen Cars?

If your car is stolen. It’s essential for you to understand how you can claim the total loss coverage or the process of filing a Car Depreciation Insurance claim. First of all contact your auto protection insurance company and tell them that your car is stolen. They will guide you through the important documentation and requirements for the claim. You need to provide some necessary documents

  • Copy of the police report
  • The insurance company’s total loss settlement
  • Any other relevant documentation

The Outstanding Loan Insurance provider will evaluate your claim. If you’ll get approved. The insurance company will Provide the necessary funds to bridge the gap between the insurance payout and your outstanding balance.

Benefits of Gap Insurance

Anyway Gap Coverage offers several benefits to car owners. We’ll list a few of them

  • Peace of mind in case of theft.
  • Financial protection in case of theft or total loss.
  • Burdened with debt: The company ensures that you’re not burdened with a significant debt. 
  • Replace your stolen car with a similar or identical model, minimizing the inconvenience caused by the theft.
  • Save you from potential financial hardships. If you owe more on your loan or lease than the car’s value.
  • If you are taking your Auto Loan Shortfall Protection from the same company that you are using for other insurances you can get pretty good discounts.

Best Vehicle finance gap protection companies

We’ve listed a few of the best, with cheap rates and good service.

IS Liability and Guaranteed asset protection insurance are the same?

Liability insurance will only cover if you’ve hit your car into someone’s property and caused some damage. Or you’ve caused some bodily injury to someone. But it will not cover if your car is stolen and it was on lease or loan.

Purchased car Lease gap reimbursement

If you’ve purchased the car or all payment of your car is done, do you still need car Loan payoff protection? 

The answer is no. That reminds me of my uncle who took a car from a dealership on a loan. He also considered Loan balance insurance. The loan was for two years and after the two years have passed. But he was still paying for the Confirmed Asset insurance. That is a great example of poor finances.

Conclusion

Is Guaranteed asset protection worth it? Well it depends on your car and your car’s market value and how long you have to pay for your loan or lease.

 As I’ve mentioned earlier, experiencing a car theft can be a very challenging situation. However, with the right insurance coverage, such as gap insurance, you can protect yourself from the financial repercussions of a stolen vehicle. You have to understand how gap insurance works and the steps involved in claiming it, you’ll be prepared to handle such an unfortunate event. Remember, gap insurance provides valuable coverage that bridges the gap between what you owe and what your car is worth, ensuring your financial well-being in the face of theft or total loss.

FAQ

Do I Need Guaranteed Asset Protection Insurance if My Car is Stolen?

Well, Guaranteed Asset Protection insurance is not necessary, it can provide you financial protection. If your car is stolen, having gap insurance can prevent you from being stuck with a loan or lease balance for a vehicle you no longer possess.

How Do I Purchase Gap Insurance?

You can easily purchase gap insurance from your auto insurance provider, the dealership where you bought or leased your car, or through specialized insurance companies. Be sure to compare quotes and coverage options before making a decision.

Is Gap Insurance Expensive?

The cost of gap insurance can vary depending on factors like your vehicle’s make and model, your state, your location, and the insurance provider. It’s generally affordable and can be included as an add-on to your existing auto insurance policy.

When Should I Get Gap Insurance?

Gap insurance is usually good for new cars, especially those with a high rate of depreciation. It’s a good idea to consider gap insurance if you’re financing a significant portion of the car’s value or if you have a lease.

Is Gap Insurance Transferable?

Gap insurance is not always transferable between vehicles. If you sell your car or pay off your loan, the coverage may not carry over to your new vehicle. Make sure to check the terms and conditions of your gap insurance policy.

How Do I File a Gap Insurance Claim for a Stolen Car?

If your car is stolen, contact both your primary auto Assurance provider and your gap insurance company.
They will guide you through the claims process and the necessary documentation.

Can Gap Insurance Cover Additional Costs?

Gap insurance typically covers the difference between your insurance payout and the remaining loan or lease balance. However, some policies may also include coverage for certain additional costs, such as your insurance deductible, taxes, and registration fees. Make sure you check your policy to understand the extent of coverage.

Does Gap Insurance Affect My Credit?

If a gap Coverage claim results in the resolution of an outstanding balance, it could indirectly have a positive effect on your credit by preventing a situation where you owe money for a vehicle you no longer possess.

Can I Cancel Gap Insurance?

Yes, you can usually cancel gap insurance. Some policies offer a refund if you cancel within a certain timeframe, while others may offer pro-rated refunds based on the unused portion of the coverage.

Does Gap Insurance Replace My Primary Auto Insurance?

No, gap insurance does not replace your primary auto insurance.

Is gap insurance worth it?

Gap insurance can be worth it, especially for new or leased cars, as it helps cover the difference between your car’s value and what you owe on a loan or lease in case of theft or total loss. It provides added financial protection and peace of mind.

What is the meaning of gap insurance?

Gap insurance is a coverage that helps you cover if your car is on lease or loan and the car is stolen. Now the insurance will cover all the left over leased or loan amount for you.

When does gap insurance not pay?

Gap insurance may not pay if the car’s value isn’t significantly lower than the loan amount.

Do i need gap insurance if i have full coverage?

Most of the time full coverage insurance provides comprehensive protection, it might not cover the entire loan or lease balance in case of a total loss.

How do i know if i have gap insurance?

Check your auto insurance policy documents or contact your insurance provider. Gap insurance is typically listed as an optional coverage and may appear separately from your standard coverage details.

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