SmartFinAI Gap insurance, or Guaranteed Asset Protection insurance, is a type of coverage that protects you financially if your vehicle is totaled or stolen while you still owe more on the loan or lease than the vehicle’s current market value. It covers the difference, or “gap,” between what you owe and what your insurance pays out.
Key Aspects of Gap Insurance:
- Financial Protection: Gap insurance ensures that you are not left paying off a loan or lease for a vehicle that you no longer possess due to an accident or theft.
- High Depreciation: New vehicles depreciate rapidly, often faster than the rate at which you repay your loan. Gap insurance is particularly beneficial for new car owners.
- Lease Coverage: If you lease a vehicle, gap insurance can be essential. It covers any remaining lease payments if your leased car is totaled.
- Cost-Effectiveness: Gap insurance premiums are generally affordable, especially when included in your auto loan or lease agreement.
- Considerations: Consider gap insurance if you have a high loan balance on a new vehicle, if you lease a car, or if you’re concerned about the potential gap between what you owe and what your insurance covers.
Gap insurance is optional but highly recommended for those who want to protect their financial investment in a vehicle. It provides peace of mind and financial security in case of unexpected accidents or theft.