What is GAP Waiver? What Does it Cover?

What is GAP Waiver?

Guaranteed Asset Protection, or GAP Waiver is optional coverage on your auto insurance that pays the difference between what you owe on your car and what it’s worth at the time of an accident. You may be asking yourself why you need additional car insurance coverage. The answer is simple; adding GAP waiver could potentially save you thousands of dollars. If you finance a new car, chances are this “gap” between what you owe and the actual worth of your vehicle will linger for a couple of years, leaving you responsible for the balance of the loan in the event of a total loss. GAP Waiver is designed to cover the unpaid balance of an auto loan in the event of a total loss of the vehicle.

In other words, what you get as a payout for a totaled vehicle might not be what you owe on the vehicle loan, and you will be required to come up with the difference out of your own pocket unless you have GAP Waiver in place. Many drivers assume collision and comprehensive insurance coverage offers full protection if their car is stolen or totaled. But if they are financing or leasing a new car and experience a total loss, they could be in for a rude awakening.

GAP Waiver is an optional, supplemental coverage for newer cars that can be added to your collision insurance policy. It covers the difference between the outstanding balance of a lease or loan due on a vehicle and the depreciated actual cash value of your vehicle (what your insurance company pays out) if the car is considered a covered total loss.

The extremely low cost of GAP Waiver (just .45 cents a day) makes it a sensible investment. GAP insurance was born out of necessity; the high cost of new cars and the calculation of the actual value versus the market value of vehicles created an ever-widening gap between the car loan amount and what an insurance company would actually pay for the vehicle if it were a total loss. We are here to close that gap for you.

At iLendingDIRECT, we want to ensure that an accident that results in a total loss will not become a financial catastrophe for you. Our credit unions will allow you to participate in the GAP program with no cash out of pocket! Call us today so our expert loan consultants can help fit this protection into your budget and your monthly payment. Reach us at (866) 683-5505, or fill out our contact form.