What is Gap Coverage?
If you have a car loan, Gap Coverage (gap insurance) will cover the remaining amount you owe on the car in the event that it’s totaled. If you find yourself in this situation, the price difference can be steep. Gap Coverage can help you avoid paying out of pocket.
How does gap insurance work?
If your car is totaled…
Let’s say you bought a car for $20,000, and you have $15,000 in payments. The “actual value” of the car (aka how much the car is worth) is considered $10,000.
Gap Coverage takes care of the difference
Gap Coverage would make sure you’re covered for that $5,000 difference between remaining payments and the car’s actual value.
What else to know
This optional coverage must be purchased at the same time as your car, and you must be the car’s first owner.