What Is Gap Car Insurance?

Explanation And Benefits Of What Is GAP Car Insurance?

Getting the right auto insurance is an essential part of protecting both your vehicle and your investment. But what kind of insurance do you need for your new or used vehicle? Read on to learn everything you need to know about GAP insurance before you buy a car, truck, van, or SUV.

GAP insurance is a type of additional coverage you can purchase for your vehicle. It’s designed to cover the difference between the current value of your vehicle and the amount you owe on your car loan or lease.

Wondering why this difference in value matters? Essentially, all vehicles become used cars the moment you drive them off the lot, even if they only have a few miles on the odometer. No matter its condition or its price, every vehicle starts to lose value immediately upon purchase.

In fact, your vehicle’s value continues to depreciate for the length of time you own it. In the first year of ownership, your car or truck’s value might decrease by a few hundred or a few thousand dollars, depending on the original price. GAP insurance exists to bridge the gap between your vehicle’s depreciated value and the balance on your loan or lease. View our inventory of New Vehicles or if you have any questions, give us a call at (817)-632-8800. Learn more about insurance in our blog here.

What Does GAP Insurance Stand For?

GAP stands for Guaranteed Auto Protection. This type of insurance extends your standard auto insurance to cover the full value of your vehicle. It can apply to just about any type of automobile, whether you have a car, truck, SUV, or van.

What Does GAP Insurance Cover?

No matter what type of car you drive, you need basic personal auto insurance. Most standard car insurance policies offer financial protection in the event of an accident or vehicle theft. Personal auto insurance policies typically cover these categories:

  • Property: If your vehicle is stolen or damaged, personal auto insurance covers part or all of the cost of replacing or repairing the vehicle.
  • Liability: If your actions damage a vehicle or another type of property or lead to personal injury, liability insurance pays for your legal responsibilities.
  • Medical: If you cause an accident, auto insurance covers hospital bills and other related costs, such as funeral expenses.

Although basic auto insurance can help you protect your investment, it can’t always cover all of your costs. For example, your car may have depreciated over the past year, resulting in a current value of $20,000. Yet if you bought your vehicle new, you may still owe $25,000 on your auto loan.

If your car is stolen or totaled today, your auto insurance may pay out up to the current value. That means you would still owe $5,000 on your auto loan. If you don’t have an emergency fund, you’d have to find a way to continue paying off your auto loan while buying another car and taking out more financing.

This is why GAP insurance can be critical. Since it covers the gap between what you own and what you owe, this type of insurance pays out if your loss exceeds the value that your personal coverage provides. In the example above, GAP insurance would cover the remaining $5,000, leaving you with no remaining balance on your auto loan.

Who Needs GAP Car Insurance?

As helpful as GAP insurance can be, not everyone needs to buy it. If you paid for your vehicle in full and you own it outright, then you don’t have to worry about depreciation or the current value of your car or truck. Since there’s no gap to cover, additional insurance doesn’t offer extra value. In fact, GAP insurance won’t provide any additional coverage for drivers who own their vehicles, even if your car is totaled or stolen.

How Is GAP Car Insurance Helpful To GMC Drivers?

If you’re financing or leasing your vehicle and it’s stolen or totaled, depreciation can pose potential issues. In fact, GAP insurance may be mandatory if you don’t own your vehicle yet. Many dealerships and financial institutions require you to carry GAP insurance if you finance a vehicle. That’s because this additional protection goes both ways, ensuring that you can pay off your loan or lease and helping you avoid financial difficulties after a theft or accident.

GMC Connected Services & GAP Car insurance

GMC Connected Services

If you currently have an auto loan or lease, you may already have GAP coverage. Check with your auto insurance company or your financing contract to confirm if it’s included or if you’re required to purchase it.

How Much Does GAP Car Insurance Cost?

Like personal auto insurance, GAP coverage usually requires a monthly premium. The cost of your GAP insurance premium typically depends on several factors:

  • The make, model, and year of your vehicle.
  • The depreciation model for your vehicle.
  • The balance on your auto loan.
To find out how much you would have to pay for GAP insurance each month, ask your insurance provider or your auto dealership. At Hiley Buick GMC of Fort Worth, we offer GAP coverage for drivers who lease or finance through our dealership, making it easy to add on this insurance before you drive off the lot. Whether you’re buying a used car or considering a new vehicle, our team of experts can help you run the numbers. We want you to know all the costs that go into buying a car so you understand the benefits you get from purchasing extra protection for your vehicle. When financing with us, we recommend considering everything from the cost of your auto loan or lease to standard auto coverage and GAP insurance to taxes and registration. With Hiley GAP Coverage, you can rest assured that you’re protecting your investment and making a smart decision for your family. When you purchase other options like Hiley Dent & Ding Repair, Hiley Theft Coverage, or Hiley Total Coverage, you can get peace of mind every time you hit the road.
Have questions about GAP insurance or are curious about whether it’s a must for you? Contact Hiley Buick GMC of Fort Worth at (817)-632-8800 or visit our dealership and talk with our team today!

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