Guaranteed Auto Protection (GAP) is an optional vehicle coverage that assists in paying off your auto loan if your car is totaled or stolen and you owe more than the car's depreciated value. GAP helps pay the gap between the depreciated value of your car and what you still owe on the car.
Why Do I Need GAP Coverage?
If you're financing a new car, many lenders require you to have collision and comprehensive coverage on your car insurance policy until your car is paid off.
GAP is used in conjunction with your regular car insurance. If you have a covered claim, your collision coverage or comprehensive coverage would help pay for your totaled or stolen vehicle up to its depreciated value. Most vehicles' value depreciates about 20 percent in the first year of ownership.
If you owe more on your loan than the vehicle's depreciated value, your GAP coverage would then kick in and help.
Can You Get GAP Coverage After You Buy A Car?
Yes, you can get GAP coverage after you buy a car, depending on the model year of the vehicle, from Better Banks.