What is GAP Insurance? - Cost, Coverage, and Value

In this episode of Proctor Car Tips, Will explains Vehicle Guaranteed Asset Protection (GAP), a type of vehicle insurance you can add on to your protection warranty when buying a car. He explains GAP, why it is important, when to consider GAP insurance, and if it is worth the cost. This is a helpful guide to watch before adding GAP insurance to your next vehicle purchase!

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Guaranteed Asset Protection (GAP) - Vehicle Protection Warranty

Learn more about common car issues, new car features, car parts, car financing, or new cars on the Proctor Car Tips Channel. These helpful car tip videos will help you learn more about car parts, how to fix common car issues, purchasing a new vehicle, trading in your old vehicle, understanding new car features, or virtually road testing the newest cars on the market.

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[Iraqveteran-kequ]

Does GAP cover roll over balance from a trade in?

[zadeh]

Gap is a scam engineered between insurance companies and lenders. If you total your car, your insurance should be obligated to pay YOU the amount for the current value of a similar car (and assure you use that fund to purchase one), or find a replacement one. Instead the law requires the insurance to pay the lienholder. But there is nothing in principle that should require your insurance company to pay the lienholder, and not you, and it actually leads to more problems. It puts the consumer in debt, and without a car - which is exactly what the system wants. The problem was that people were getting big checks from insurance companies after totaling their car, and instead of buying replacement vehicles, they were wasting it on gambling and frivolous luxuries. Without a car, it's unlikely such consumers made good to pay their lenders back, what they owe. So in many instances lenders will lose money, if insurance writes a check to the consumer. But lenders will also lose money, and often unlikely to see the gap amount, if the consumer doesn't have a replacement car. But if the insurance just replaced the totaled car with a similar one, or provided a payout in the current value of the car (provided the consumer agree to use that money to purchase a similar vehicle) - then it seems, everyone would be happy. Why should the lender care if I am in an identical replacement vehicle, as long as I am making due payments? Even if they have to repossess the car at some point, they are taking back a vehicle that would be hypothetically identical, to the (then totaled) vehicle they originally provided a loan for.