What is GAP insurance, anyways? What is the cost of GAP insurance? Is Auto GAP insurance right for me? These are some of the commonly asked questions people have about guaranteed asset protection coverage, one of the value-added services CARS offers its customers. Learn more about Auto GAP insurance in the below frequently asked questions.
What is GAP Insurance?
In the event your vehicle is stolen, accidentally damaged beyond repair, or otherwise declared an insured total loss, your insurance company pays the actual cash value of the vehicle at the time of loss. This may be significantly less than what you owe on your loan. You remain liable for the payment of the difference between your insurance company’s settlement and the balance of your loan. This deficiency, added to the amount of your deductible, and other expenses, can easily be thousands of dollars – money that comes out of your pocket unless you have auto GAP insurance!
What are the benefits of GAP?
- GAP auto insurance pays your remaining loan balance after insurance proceeds are applied to your loan.
- Benefits are paid up to $50,000.
- Protection is provided for the term of your loan (up to 84 months).
- Covers primary insurance deductible up to $1,000.
- Ability to cancel with 100% refund within 30 days of the loan date, and a prorated refund thereafter.
- Prevents deficiency balance from being added to a new loan.
- Helps protect your credit rating
What vehicles are eligible for GAP?
New and used autos, vans, SUV’s and light trucks up to 1 ton load capacity.
Can I buy GAP on a salvage/reconstructed titled vehicle?
No. Salvage or reconstructed title vehicles are not eligible for GAP.
I will be using my vehicle for my business, can I buy GAP?
If the vehicle is titled under an individual, not a business name, it is eligible for GAP. However, vehicles used for hire, rental, or taxicabs are not eligible.
Can I buy this same type of coverage through my dealer?
Yes you can. However, you will find GAP rates sold through dealerships are generally much higher and gap protection is purchased in conjunction with the loan it protects.
Does GAP replace my comprehensive and collision coverage?
No. GAP is not a substitute for collision or property damage insurance. You must continue to maintain comprehensive and collision insurance coverage or your GAP coverage will be void.
What is the cost of GAP Insurance & How Do I Pay For It?
The one time low fee for your auto GAP insurance is financed in with your loan. Unlike some GAP policies, our policy is refundable on a pro rata basis.
Will I receive something in the mail after I purchase GAP explaining the coverage?
No. The GAP coverage is defined in the GAP Waiver Addendum given to you at the time of refinance.
Can I purchase auto GAP insurance after loan origination?
No. If you choose to purchase GAP coverage, it must be executed at the time of your refinance.
How is my deductible covered by GAP?
The primary insurance deductible is covered as part of your unpaid loan balance; it is not “reimbursed”. GAP covers the difference between the actual cash value (ACV) of your vehicle and the outstanding loan balance. Since your insurance company pays ACV less the amount of your deductible, the “gap” is increased by this amount. When the GAP proceeds are applied to your loan balance, the deductible is paid as part of that payment.
If my primary insurance pays off my loan balance in full, does GAP reimburse me for my deductible?
No. See “How is my deductible covered” question above. Since you did not actually pay the deductible, GAP does not pay the deductible back to you.
How do I file a claim?
In the event of a total loss, it is your responsibility to keep your loan account current until any deficiency is determined and paid.
You must provide the following documentation to the Program Administrator listed on your Debt Cancellation Contract. If there are ever any questions, a CARS representative would be happy to help!
- A copy of the primary insurance company claim settlement check and settlement worksheet.
- A copy of the police report made for the incident.
- A copy of the original financial agreement and addenda, including the vehicle bill of sale, proof of proceeds recovered from cancellation of refundable items, such as and extended service contract, credit insurance, or other similar items.
- Documentation from the Lender detailing the outstanding balance as of the date of loss and a complete payment history.
- A copy of your GAP Waiver Addendum.
Is there a deadline to file a GAP claim?
GAP claims must be filed within 120 days from the date of total loss of your vehicle.
How do I receive payment for the GAP claim?
The GAP claim settlement is paid to the lender and applied to your loan.
I have an extended warranty on my vehicle – does this affect the GAP claim?
GAP does not cover the refundable portion of any service warranty or full term credit life insurance since you can obtain this reimbursement back by canceling the policies with the appropriate companies.
What is the maximum amount GAP will pay?
Maximum GAP loss covered is $50,000.
Does GAP pay if I am uninsured?
No. You must maintain comprehensive and collision insurance on your vehicle or your GAP contract will be void.
I am refinancing my loan and changing terms. Can I purchase GAP at that time?
Yes, the GAP would cover the new loan term and balance.
Can GAP be transferred to a different vehicle?
No, it cannot be transferred to a different vehicle.
I am refinancing my loan at another financial institution – can the GAP transfer to my new loan?
No. The GAP is non-transferable.
My car has been totaled. Should I continue to make payments on my loan?
Yes. Continue to make your loan payments and notify the claim representative of the total loss as soon as possible.
Is GAP required to obtain credit? If I purchase GAP, can I cancel my GAP in the future?
GAP protection is optional and not required to obtain credit. If you purchase GAP, your GAP coverage may be cancelled anytime in the first 30 days for a full refund. After 30 days the refund will be pro-rated based upon the remaining coverage. For cancellation, call us at 1-800-779-2111.
Learn more about CARS other products
Interested in learning more about Refinancing an existing auto loan? Head to our Refinance FAQ page.
Learn more about Vehicle Service Contracts at our VSC FAQ page.