GAP Insurance on Auto Shield

Posted by Johnson Hamingway on July 15th, 2019

GAP Insurance. What it covers?

GAP insurance is an optional, add-on car insurance coverage that helps drivers cover the “gap” between the amount owing on their car and the car’s actual cash value (ACV) in the event of a motor vehicle accident. 

A car’s ACV is the car’s monetary value at the time of accident, not the car’s original price.

GAP Insurance Example

In the event that you are involved in a covered accident, are considered not at fault and your car needs to be replaced you may be ‘underwater’ or ‘upside down’ on your loan. This means that if you owe ,000 on your auto loan, but your ACV is ,000, you still owe, ,000. Because of the ,000 owing, you are considered ‘underwater’ or ‘upside down’. As the driver and owner of the vehicle, you are responsible for paying for the ,000, unless you have GAP insurance. 

With GAP insurance, you will be covered for the ,000 owing to your auto loan. Drivers do not require gap insurance, however, it is beneficial for drivers to have. Regardless of how cautious a driver may be, anyone is subject to major car accidents. Therefore, GAP insurance is a strong asset for drivers to buy in the event of needing extra coverage