GAP Insurance is also known as Guaranteed Auto Protection or Guaranteed Asset Protection and as GAP within the North American financial industry. GAP insurance covers the difference between the actual cash value of a vehicle and the balance still owed on the financing (car loan, lease, etc.). GAP coverage is mainly used on new and used small vehicles (cars and trucks) and heavy trucks. Some financing companies require it.
GAP insurance covers the amount on a loan that is the difference between the asset value and the amount covered by another insurance policy. Some GAP policies also cover the deductible. This coverage is marketed for low down payment loans, high interest rate loans and loans with 60 month or longer terms. GAP insurance is typically offered by a finance company at time of purchase. Most auto insurance companies offer this coverage to consumers.
There are two ways of getting GAP coverage. The first type is an insurance policy sold by a broker. The second type is a waiver agreement sold by a Finance & Insurance Manager. The first is regulated by the insurance industry, the second is unregulated. In either case coverage is usually the same and sold as a soft product through the car dealership. Coverage is usually financed along with the lease/loan. Claims are subject to a total loss. The total loss is usually determined by the primary insurance company’s third-party appraiser.
Exclusions to GAP insurance vary by country or state. Some exclusions include a maximum loss limit of $50,000 while others require a loan term of less than 84 months. GAP is an optional purchase; however, many states in the US require that a car dealership offer GAP at the point of purchase. States such as Louisiana require that the purchaser sign a disclosure document as proof. Although GAP is optional, some finance companies require GAP as a condition to obtaining a loan.
Famous quotes containing the words gap and/or insurance:
“The temples, the tank, the jail, the palace, the birds, the carrion, the Guest House, that came into view as they issued from the gap and saw Mau beneath: they didn’t want it, they said in their hundred voices, “No, not yet,” and the sky said, “No, not there.””
—E.M. (Edward Morgan)
“... business training in early life should not be regarded solely as insurance against destitution in the case of an emergency. For from business experience women can gain, too, knowledge of the world and of human beings, which should be of immeasurable value to their marriage careers. Self-discipline, co-operation, adaptability, efficiency, economic management,—if she learns these in her business life she is liable for many less heartbreaks and disappointments in her married life.”
—Hortense Odlum (1892–?)