Automotive Guaranteed Asset Protection—or GAP—is becoming increasingly popular. In fact, a recent study predicts that GAP insurance will become a $6.5 billion market by 2027—a 14.6 percent increase in just seven years. But what exactly is GAP insurance? Why is it becoming so popular? And do you need it? These quick facts can help you decide.
- What is GAP insurance?
Guaranteed asset protection (GAP) insurance is what the name suggests: Insurance that covers the “gap” between what you owe on your car and its worth.
- Who needs it?
GAP insurance is designed for drivers who are either financing or leasing their car. A car’s value depreciates the moment you drive it off the lot, so most people actually owe more on their car than it’s worth. That means if you experience a total loss, your car insurance company will only pay what it’s valued at, not how much you owe on the loan or lease. In fact, some lenders may require you purchase GAP insurance in addition to comprehensive coverage.
- Who doesn’t need it?
If you own your car with no debt to others, GAP insurance isn’t the right solution for you. Alternatively, if you’ve paid off enough of your car that you owe less than the car’s value, GAP insurance would not be beneficial to you.
- What does it cover?
If your car is stolen and never recovered or totaled due to fire, vandalism, an accident, flood, tornado, or hurricane, GAP insurance will cover the cost.
- What doesn’t it cover?
While GAP insurance covers a number of things, it does not cover your insurance policy deductible, engine failure (unless due to a total loss accident), injuries, medical expenses, lost wages, or funeral costs.
- How do you get GAP insurance?
While some insurers and dealerships provide GAP insurance options, you can also purchase it through lenders like Suffolk Federal. For only $199, you can purchase GAP insurance any time throughout the life of your auto loan.
Now that you understand what GAP insurance is and if you’ve decided it’s the right coverage for you, contact Suffolk Federal to purchase your added peace of mind today.