What is GAP Insurance?

Signing Finance Documents for Car
 

Gap insurance, also known as gap protection or guaranteed asset protection, is a type of auto insurance coverage that helps protect you financially in the event of a total loss or theft of your vehicle. It covers the “gap” between the actual cash value of your car and the amount you owe on your auto loan or lease. When you want to apply for coverage, or if you just want to learn more, contact us at Bayer Cadillac near Abilene where our finance center can help answer your questions.

 

 

What is GAP Insurance On a Car?

When you buy a new car, its value depreciates quickly. If your car is stolen or deemed a total loss in an accident, your primary auto insurance will typically only cover the current market value of the vehicle, which may be significantly lower than the amount you still owe on your loan or lease. 

So, if you are curious “what is GAP protection?”, here’s how it works:

  • Coverage: Gap insurance covers the difference between your car’s ACV and the remaining balance on your loan or lease. It ensures that you are not left with a financial burden if your car is totaled or stolen.
  • Loan/Lease Balance: Gap insurance is particularly useful when you have a loan or lease with a high outstanding balance compared to the actual value of the vehicle.
  • Premiums and Duration: Gap insurance is usually purchased as an add-on coverage option when you buy or lease a car. The premiums can be a one-time payment or included in your monthly auto insurance payments. The duration of coverage varies but is typically limited to a few years.
  • Requirements and Limitations: Gap insurance may have certain requirements and limitations, such as a maximum coverage limit or restrictions on the age and condition of the vehicle.
  • Eligibility: Gap insurance is available for both new and used cars, but availability may vary depending on your insurer and location.

What is GAP Insurance & Is It Worth It?

Having gap insurance can provide you with financial protection and peace of mind, especially if you have a high loan balance or lease agreement. It helps bridge the gap between what your primary auto insurance covers and what you still owe, preventing you from being responsible for paying off a loan or lease on a car you no longer have.

It’s important to note that gap insurance typically does not cover other expenses such as your deductible, late payments, or extended warranties. Additionally, gap insurance is not a substitute for regular auto insurance, as it only covers the “gap” in specific circumstances.

Learn More at Bayer Cadillac Today!

If you are interested in insuring your new vehiclefurther, contact our finance department at Bayer Cadillac near Graham and Weatherford. Our knowledgeable staff is standing by to help answer any questions you may have.

 

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