When purchasing a new or pre-owned vehicle, you might be asked if you want to buy GAP, also known as guaranteed asset protection. GAP insurance is designed to cover the “gap” between the remaining cost of the auto loan and what your auto insurance will pay out in case of an emergency. Let’s explore some instances where GAP insurance can be helpful.
Your Vehicle is Stolen
If your car is stolen, your insurance will likely pay out the sticker price or Blue Book price of the car. Unfortunately, that doesn’t account for accrued interest costs or other fees. GAP insurance will bridge the distance between the amount your insurance gives you and the remaining amount of your loan.
Your Vehicle is Totaled
Vehicle damage works similarly. A vehicle is considered totaled if the value of the car is less than the cost of the repairs, in which case the dealership will give you a payout based on the value of the car. This means you may be stuck holding a loan on a vehicle you no longer have. GAP insurance makes sure you aren’t.
You’re Leasing a Car
Most lease agreements will either require GAP insurance or fold the cost of GAP insurance into the contract. Leased vehicles are often brand new, and new cars lose their value very quickly. That’s why you may see a smaller payout from the insurance company than the lease agreement is for. GAP insurance will protect you from outstanding lease costs.
Here at Johnson Motors, we believe in a comprehensive approach to car ownership and care. That’s why we offer auto financing support, reliable service, and all the information you need on GAP insurance and coverage.
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