If your vehicle is considered a "total loss" after an accident, the responsible insurance carrier may only pay the equivalent of the vehicle's current value and not the full amount owed under your loan or lease. This "gap" between what the vehicle is worth and what is owed under your loan or lease becomes your financial responsibility, which could easily be several thousand dollars. Customers who purchase GAP are protected from increased financial risk because GAP pays the finance company or lessor the difference between the outstanding balance and the amount paid by the primary insurance carrier.
* Maximum benefit payable for RV or watercraft GAP is $50,000.
** The actual GAP agreement enumerates exclusions to GAP coverage. Some of these exclusions, like delinquent payments, extensions, deferred payments, past due amounts and late charges may decrease the gap amount that is waived. Amounts financed in excess of the GAP agreement terms will not be waived. A maximum claim amount may apply.
For example, if you owe $31,000 on the loan or lease of your vehicle and your insurance settlement value is $26,000 after your deductible of $1,000, you are left with a “gap” of $5,000 still owed on your vehicle.