GAP Insurance Inquiry
We recently bought a car for $77,000, but after including maintenance, glass coverage, wheel protection, etc., our total financed amount came to $92,000. Given the number of deer in our area and the number of new cars we’ve seen that have been totaled, I’m concerned. Let’s say, for instance, that after six months, our car is totaled and its current value is $67,000. If I decide to get GAP insurance, will it cover the difference between the current value of $67,000 and the original purchase price of $77,000, or will it cover the difference between the financed amount of $92,000 and the car’s value? Thanks in advance for your help!
GAP (Guaranteed Asset Protection) insurance is designed to cover the difference between what you owe on your car loan and its actual cash value (ACV) at the time of a total loss. In your case, since the financed amount is $92,000 and the current value of your car is $67,000, if you have GAP insurance, it would pay the difference between the amount you owe ($92,000) and the ACV ($67,000).
So, in this scenario, if your car is totaled, the GAP insurance would cover $25,000 ($92,000 – $67,000), helping you avoid owing that amount out of pocket.
It’s always a good idea to double-check the specifics of your GAP policy, as coverage can vary by provider. But generally, it focuses on the financed amount versus the current market value of the vehicle.