GAP stands for Guaranteed Auto Protection. Often referred to as GAP, this insurance term represents the gap in coverage between how much a person owes on a vehicle and how much it is worth. GAP insurance is necessary in almost all vehicle insurance policies and is available at a relatively low cost.
How can you owe more on a car than it is worth? Actually when you buy a brand new car and drive it off the lot, the value of your vehicle plummets as much as 30%. So if you are involved in an accident a month or two after buying a brand new car, you could be in trouble without GAP insurance. Even with full coverage, which includes comprehensive and collision, you will only receive the market value of your vehicle which could be 20%-30% lower than your purchase price. Without GAP insurance, you will have to pay the difference between the loan value and the insurance pay-off; it could easily be thousands of dollars.
Find out if you have GAP insurance with your current insurance plan. This is an important provision in you policy that will offer peace of mind and prevent you from having to pay the difference between your loan amount on the car and the actual market value of the car in case of an accident. Before buying or leasing a new car, check to see if you have GAP insurance as part of your automobile insurance policy.
If you have questions about GAP insurance or your automobile insurance coverage, call Insurance Doctor.