What is Gap Coverage?
- Gap Insurance, also known as Loan/Lease Payoff Coverage, protects you against an “upside-down” loan or lease in the event your vehicle is stolen or totaled (total loss).
- “Upside-down” simply means that the payoff amount of your loan or lease is higher than the actual cash value (ACV) of your vehicle.
Who needs Gap Insurance?
- If you recently acquired a new vehicle and your loan or lease pay-off is higher than the actual cash value of your vehicle, you will want to consider adding Gap insurance to your auto policy.
- You can obtain loan or lease pay-off coverage on any newly purchased vehicle within thirty (30) days. This coverage is not available on used vehicles.
How does it work?
- In the event of a total loss, Comprehensive and Collision Coverage only pays the ACV of your vehicle. For Example: Your Loan/Lease payoff is $20,000 and the actual case value of your vehicle at the time of loss is only $16,000 - making you “upside-down” on your loan. Without GAP coverage you would be responsible for paying the finance company the difference of $4,000.
- If you need assistance in determining the “upside-down” value of your loan or lease, contact your dealer or finance company and they can give you information on both, the actual cash value of your vehicle and your loan and lease balance. You can also refer to our NADA or Kelley Blue Book Link to review your vehicle value vs. loan pay-off.
Who sells it?
- All companies do not offer GAP coverage. As an independent agent we can shop your auto insurance and get you the best price on both your basic coverage needs as well as a GAP coverage through some of our available markets.