GAP Advantage Insurance
What is GAP Advantage Insurance?
Guaranteed Asset Protection (GAP) Advantage Insurance is a voluntary program offered as protection on a new, used, or refinanced car, truck, SUV, motorcycle, RV, or boat. If your vehicle is stolen or declared totaled, your auto insurance company will only pay you the actual cash value of the vehicle at the time it was totaled. Without GAP Advantage Insurance, your lender will hold you responsible for paying the difference between the actual cash value and what you still owe on your loan. That's where GAP kicks in and pays the difference, or "gap", that you still owe on your loan.
GAP Advantage Insurance also provides you with a $1,000 credit towards the financing of a replacement vehicle if financed with the same financial institution. GAP Advantage Insurance will also pay up to $500 per loss (limit two losses per year) when a loss is filed and paid by the auto insurance company. A loss means an event for which the auto insurance company has approved and paid a collision or comprehensive claim which exceeds the auto insurance policy deductible for the covered vehicle.
Who needs GAP Advantage Insurance?
For buyers, GAP Advantage Insurance makes sense if you expect owe more than the cash value of the vehicle. This can happen when you:
- Made a low down payment
- Bought a car that depreciates rapidly
- Have a high interest rate
- Rolled over other costs (such as money owed on a trade-in) into your new car payments
As a general rule, if you finance more than 80% of the vehicle's value in your loan, GAP Advantage Insurance is a good way to protect your investment.