GAP Scenarios

The chart below illustrates the relationship between the "book value" and the "amount you still owe on your loan" for the typical vehicle. The "book value" is the maximum amount of money your insurance company will pay you if your vehicle is declared a "Total Loss". As you can see, there is a "Gap".

For example, if your car was in a serious accident, or was stolen, one month after you bought the car, the money the insurance company gives you will not cover full amount that you still owe on your car loan. They only pay the book value, not the amount you currently owe. Even worse since the car no longer exists for the bank to use as collateral, the bank will often ask you to immediately pay this cash shortfall out of your own pocket! This can often be thousands of dollars. Ouch!

The fact is that most auto insurance policies only cover the "book value" of your vehicle, not the amount that you actually still owe with your car loan. Purchasing a GAP Warranty solves this serious problem! GAP Warranty provides protection that you need when your auto insurance leaves you stranded.