What Is GAP Insurance and When Can It Help?
Some policies have payment limits or other restrictions.
Shanti
10/27/20261 min read
What Is GAP Insurance and When Can It Help?
If your vehicle is stolen and not recovered, or declared a total loss after an accident, your collision or comprehensive coverage will typically pay the vehicle’s actual cash value, rather than the amount you still owe on your loan or lease. If your outstanding balance is higher than the vehicle’s actual cash value, GAP insurance may help cover the difference.
For example, suppose your vehicle’s actual cash value is determined to be $22,000, but you still owe $27,000 on your loan. In this situation, there is a $5,000 gap. Depending on the terms and coverage limits of your policy, GAP insurance may cover some or all of that amount.
Your primary auto insurance payment may be calculated after your deductible is applied. Whether GAP insurance covers the deductible or the entire remaining balance depends on the terms of your policy. Some policies have payment limits or other restrictions.
Before purchasing GAP insurance, review the policy carefully. Check what is covered, the maximum amount the policy will pay, and whether any deductions or additional costs apply. Once your loan balance becomes lower than your vehicle’s actual cash value, you may no longer need GAP coverage.
Contact Us
Reach out anytime for personalized support
Phone
© 2025. All rights reserved.