GAP insurance stands for "Guaranteed Auto Protection".
Gap insurance coverage will guarantee you full insurance coverage on any eligible vehicle no matter who's fault the accident is.
GAP insurance coverage provides you financial protection in case your leased vehicle is stolen, totaled or involved in an accident. There are two types of gap insurance coverage. One is a waiver by the lessor of the gap amount if the vehicle is stolen or totaled. The other is a contract type, usually by a third party. Under either type, you may remain responsible for the insurance deductible and for other amounts deducted from the insured amount of the vehicle by your insurance company.
The reason you need GAP coverage is because your regular auto insurance coverage only pays the actual cash value of your vehicle. Without GAP insurance, your insurer would issue payment based upon the current retail market value of your car and would not take into account any existing loans or balances you may still have. This is only to be expected because what if you owe, for some reason or another, 50% more than the actual vehicle is worth. Whould you expect your regular auto insurance policy to cover you for more than the actual value?
You should always ask your insurance agent or company about GAP insurance when shopping for a new car or motor home if you think you may need the additional coverage. Many leasing and financing companies require Gap insurance, you should inquire before buying or leasing your next car.
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