GUARANTEED ASSET PROTECTION (GAP)

An auto insurance policy is not designed to pay off an auto loan, it is structured to reimburse the actual cash value of an insured vehicle. When a financed vehicle is deemed a total loss due to an accident or theft, there still may be a remaining balance to be paid to the lienholder after the insurance settlement. All vehicles depreciate and the rate of that depreciation may be faster than the loan repayment schedule, creating a “gap” between a loan payoff balance and an insurance settlement.

GAP protects a vehicle owner from potential expense through an addendum to the vehicle finance contract.