Guaranteed Asset Protection (GAP) insurance pays the difference between the actual cash value of a vehicle and the balance on the loan (if financed). If you are in an accident or your car is damaged irreparably and seen as totaled by your insurance carrier, GAP insurance will cover any differences between the cash value of your vehicle and how much you owe.
The actual cash value of your car is a set of factors used to determine how much your car is worth. Factors can include how old your car is, milage and past accidents.
That means that if your car is totaled and your cash value is $25,000 but you still owe $27,000, your gap coverage will kick in and cover the additional $2,000.
NOTE: If your policy number is formatted as LOOP-0000001234-00, we do not offer this coverage at this time. We do have plans to offer it in the future.
Blog Post: How Much Auto Insurance Do I Need?
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