GAP

GAP Coverage: What is it?

 

Guaranteed Asset Protection (GAP) is a vital consideration when navigating the world of auto financing, especially if you wonder, “What is GAP protection?” GAP coverage is a financial safeguard if your leased or financed vehicle gets declared a total loss due to an accident or theft.

If a total loss occurs, and there is a difference between what you receive from your insurance company and the net payoff, the GAP provider, not you, will pay the balance, with fewer exclusions, and excess deductibles.

Understanding how GAP coverage works is crucial. In theory, if your vehicle is totaled and there’s an amount between the insurance payout and your auto loan or lease balance, GAP coverage will cover that gap. This coverage ensures you won’t be left with a deficient balance, offering you peace of mind during harsh circumstances.

The decision to invest in GAP insurance often prompts the question, “Is GAP coverage worth it?” Assessing whether GAP coverage is worth the investment depends on various factors.

In summary, when thinking about GAP coverage, weigh the potential benefits against your circumstances. Evaluating the terms of your auto loan or lease, understanding how car gap insurance works, and considering the value of your vehicle can help you make an informed decision. For more information, contact Community Honda of Cedar Falls, IA

Gap Coverage

Why get it from your dealership and not your Insurance Provider?

  • No Deductible: Under the auto insurance GAP policy, you must pay a deductible when you file a claim. Our GAP policy has no deductible and will cover up to $1,000 deductible.
  • No impact on insurance rates: The more claims you have against your auto insurance policy, the more insurer raises your rates. Claims against our GAP policy do not affect auto insurance premiums.
  • No risk of cancelation: Auto insurers can cancel policies if the customer files one too many claims. Not true with claims against our GAP policies.
  • Freedom to switch insurers: If you buy from the dealership, you can switch auto insurers without losing GAP coverage. But if you want to maintain your insurer's GAP coverage, you must stick with that insurer over the term of the vehicle loan.
  • Replacement vehicle: If consumers get GAP coverage from the insurer and the vehicle is totaled, the insurance company is more likely to fix the vehicle than to total it.

Here is an Example: Let’s say you lease a car for $30,000 and owe $26,000 on your loan. If you get into an accident that puts your vehicle at a total loss, and does $20,000 of damage. The insurance company payout is $20,000 to fix the car, putting you at a loss. However, if you have GAP Coverage through the insurer and the insurer totals the car, it has to pay $30,000.

That is why even some insurance agents don’t get GAP from their own company.