inquiry into the workings of gap insurance on vehicle, what does it cover?

Question

gap cover goes up to 25,000, loan from bank to pay the car finance off, if your car is stolen or written off does the gap insurance cover the bank loan that payed off the car finance? am very very worried, as 3 attempts have been made on my car to steal it! would i still be left with an outstanding bill? sleepless nights have been plentiful!!!

Answer 1

This endorsement is designed as protection from economic loss in the event of a total loss from Collision or Comprehensive when the amount of an outstanding loan indebtedness or lease obligation is larger than the actual cash value of the damaged vehicle. This endorsement is subject to the appropriate Collision and Comprehensive deductibles shown on the Declarations Certificate.

1. Excluded Charges

The following charges are excluded from coverage under the endorsement:

Excessive mileage charges

Excessive wear and tear charges (as defined in the lease agreement)

Extended warranty charges

Credit life insurance premiums

Any other coverages or charges which are financed as part of the purchase or lease contract
2. Eligibility

To be eligible for this endorsement:

The vehicle to be covered must be new. New is defined for this endorsement as a vehicle that has not been previously titled under the motor vehicle laws of any state.

The vehicle must be added to this endorsement within 30 days of leasing or financing the vehicle.

The vehicle must carry both Collision and Comprehensive coverages.

The incurred indebtedness must be obtained through a financial institution.
3. Vehicles not eligible

The following vehicles are not eligible for this endorsement:

Antiques
Classics
Trailers
Recreational use vehicles
This endorsement does not automatically apply to any vehicles which replace a vehicle covered by this endorsement.

The policyholder will be issued a Loan/Lease Value Endorsement -

Answer 2

Gap insurance cover the difference in what you owe against the car and what the insurance company would pay you in the event of a total loss. Say you owe the bank 28,000 and the insurance co tells you the car pay off is only 21,000; your gap insurance would pay the 7,000 differrence. Some gap insurances will even give you extra $ toward a down payment on a new car. Mine pays off the loan and gives me $1,000 towards a new car. This is a must have if you have any neg equity or a new car.

Answer 3

Gap insurance will cover the difference between what the insurance company pays and your outstanding loan balance if your car is totalled or stolen and not recovered.

Example, Car totalled:

Fair market value at time of loss: $20,000.00
Loan balance at time of loss: $23,000.00

Auto Insurance company pays $20,000.00
Gap insurance pays $3,000.00

Your outstanding balance owed: $0.00

Without Gap insurance, you'll still owe the loan company $3,000.00.

Sleep soundly!

P.S. Keep in mind that in a couple of years you should owe less than the car is worth. In that case, Gap will pay nothing but you don't need it anyway as the insurance payout is enough to pay off the loan with something left over. For this reason, Gap insurance is pretty cheap. My bank offers it for free if I insure with their tied insurance company, USAA, which of course I do.

Answer 4

The fact is that if your vehicle is written off it is likely that your motor insurance would only pay you the market value of your vehicle at the time it was written off.

This could leave you in one of three situations:

i Possibly not being able to afford to replace the vehicle with
a new equivalent (Replacement GAP)
ii Not getting your original invested amount back (Invoice GAP)
iii Not being able to clear clear the remaining outstanding finance for which you would still be liable (Finance GAP).

Go to this site: http://www.click4-gap.net/

Answer 5

Gap insurance covers the difference,your car would be paid off that's why its called gap.....it covers the gap of what you still owe on the car and what it is now worth.
that's why it costs extra,its a great insurance to have ,talk to your insurance agent and he can give you all the information you need.gap costs extra and is not the same as other insurance its sort of a rider . talk to your agent OK American Family Insurance offers gap policy's on cars that are not brand new. at least in Carmel,IN.

Answer 6

my gap policy payed the amount outstanding on my hp agreement after a non fault crash .if i didnt have gap i would be paying for a car i dont have.