Loading

  We're here to protect insurance consumers

• Home
• Consumers
• Agents/Brokers
• Companies
• Contact Us

Gap insurance

Gap insurance covers the gap between what you owe on your auto or motor-home loan and its current market value.

If you're in an accident and your insurance company decides your vehicle or motor home is totaled (also called total loss), your collision coverage:

• Will only pay you the current market value.
• Won't cover any amount you may still owe on your loan.

---

Example:  How gap coverage works

• Loan balance on a 2009 vehicle: $18,000
• Actual cash value: $16,000
• Payoff without gap coverage: $16,000 (minus your deductible)
• Amount still owed: $2,000
• Payoff with gap coverage:  $18,000
• Amount still owed: $0

---

If you think you want or may need the additional coverage, ask your insurance agent or company about gap coverage when you shop for a new vehicle or motor home. They don't have to offer it to you, but they must sell it to you if you ask.

What gap insurance doesn't cover

It doesn't cover any interest the lender charges you, or any late fees or missed loan payments.

Don't have gap? Here's something else to consider

If you don't have gap coverage, ask your lender about extending your existing loan to your replacement vehicle. This is called a collateral exchange. The lender adds the payoff amount (after the insurance payment) on your existing loan to your replacement vehicle loan.

Updated 04/16/2012