Gap protection in auto insurance is basically designed to eliminate the vehicle owner's outstanding loan or lease amount in the event of the vehicle being stolen or assessed as a total loss. GAP insurance will pay the remaining payments on the lease or loan on the vehicle as his/her primary insurance policy does not cover this. As the name suggests GAP insurance protects the gap between the payments already made and the total loan amount on a vehicle when it gets totaled in an accident.
The GAPwaiver fills the financial GAP that may be found between the market value of your vehicle and the money you still owe on the vehicle when it is totaled due to accident or theft. GAP insurance is a typical secondary coverage which is purchased to give the motorist the gap protection for his vehicle for which payment on the lease or loan is still due. The contract on which the GAP protection is built in is known as GAP waiver.
Specific rules on your GAP insurance policy rules will decide if your deductible is covered as part of your coverage. Normally GAP insurance will pay the difference between the actual value of the vehicle (ACV) and what is actually owed on the vehicle’s lease. A few GAP policies pay for the deductible.
In essence Guaranteed Auto Protection GAP in short pays for the losses that traditional car insurance does not cover. It provides coverage for the difference between the value of your car and what is remaining to be paid on its loan if you are involved in an accident in which the car gets totaled. In other words, if you owe more than the vehicle’s present value on its loan, GAP insurance will cover the difference.
Normally converge provided by GAP insurance is when
* Vehicle becomes a total loss due to an accident or theft
* GAP insurance pays difference between the vehicle’s ACV and the loan payoff
* Coverage provided up to 150% MSRP or NADA Retail values
* Covers deductible up to $1000
* Covers other losses up to $50,000
* Provides coverage for financing terms up to 84 months
* Compensates all risk physical damage
* Provides coverage for non-covered theft protection