Is GAP Insurance Needed? 

When you buy or lease a vehicle, you will typically have the option to purchase guaranteed asset protection (GAP) insurance. This coverage is cleverly named as it can help bridge the gap between what you own on the auto loan and the vehicle’s actual cash value (ACV) if it is totaled or stolen. When you take out an auto loan, it’s essential to understand if GAP insurance is right for your circumstances.

Benefits of GAP Insurance

The most notable benefit of GAP insurance is the financial protection it offers. If your vehicle is totaled in the first few months of the loan term, standard auto insurance will typically only cover the ACV, which may be less than your loan amount. This can be because the value of new vehicles depreciates rapidly. Without GAP insurance, you would have to pay the remaining loan amount out of pocket, which could be thousands of dollars.

Who Needs GAP Insurance?

GAP insurance can be particularly beneficial for the following situations:

• A person made little to no down payment.

• The loan term is 60 months or more.

• The vehicle is being leased. (Many lease terms require GAP insurance.)

• The vehicle being purchased depreciates faster than average.

Learn More

To discuss GAP insurance near you, contact Sunstar Insurance of Arkansas.

This blog is intended for informational and educational use only. It is not exhaustive and should not be construed as legal advice. Please contact your insurance professional for further information.