Gap Car Finance Insurance Explained
31 Aug 2010 Leave a Comment
in Insurance
Guaranteed Asset Protection (GAP) Insurance is designed to settle the discrepancy between the finance amount owed on a vehicle and the payment an insurance company made if it is stolen or declared a total loss after a collision. The purpose of this type of insurance is to secure the car s value.
GAP then is insurance to protect you from the money lost because of the difference in the amount paid for the car by the car insurance company and the amount owed for the personal loan to buy the car by the car finance company. For example suppose you paid 15000 to buy the car but it was then stolen.
The car insurance company has valued your car at 10000 because you have had it for a while and put many thousands of miles on it. This leaves you with a shortfall of 5000. If you have GAP insurance it will pay you the 5000.