GAP insurance refers both to Guaranteed Asset Protection and Guaranteed Auto Protection. In both cases it is designed to cover the difference (or gap) between the actual cash value of an asset and the amount still owed on the related loan or lease. While, strictly speaking, GAP insurance may apply to any type of asset, the vast majority of GAP insurance policies are written for cars, trucks, vans, and other types of vehicles.
Cars, trucks, motorcycles and other vehicles are assets that depreciate rapidly in value. In cases where a low down payment is made on the initial purchase, it is common for the amount remaining on the loan to exceed the fair value of the car. This is because cars often lose up to half their retail within 3 years from the purchase date, at which time the remaining loan may far exceed that amount. If your car becomes stolen or is totaled, the replacement value you receive from the insurance company may be far less than the amount remaining on the loan. In such cases a GAP insurance policy would cover the difference. If you would be unable to cover the difference without GAP insurance in such cases, or if this would represent a significant financial hardship, then GAP insurance may be right for you.
GAP insurance may be purchased from an insurance agent or through a car dealership. GAP insurance coverage is often financed as part of the loan or lease, and typically comes into play when a vehicle is subject to a total loss. Some finance companies require GAP insurance when financing a loan.
We suggest checking first with your independent insurance agent before signing a GAP policy related to a vehicle purchase. Your independent agent may be able to save you money by adding this coverage to your vehicle insurance policy rather than taking out a separate policy through your car dealership. To learn more about getting the right GAP Insurance for your vehicle, call us at 610-775-3848 or use the Contact Us form.
When it comes to insuring your business “GAP insurance” refers to Guaranteed Asset Protection, and often comes in the form of a “guaranteed replacement cost” or “agreed value” insurance policy. In such cases your business property is insured for an amount that is guaranteed in advance regardless of what the market value may be at the time of your claim. This speeds the time to settle your claim, and may help you sleep better at night.
To learn more about the many commercial insurance options for your business, call us at 610-775-3848 or use the Contact Us form.