DelphiFAQ Home Search:

What is Gap Insurance?


comments2 comments. Current rating: 5 stars (1 votes). Leave comments and/ or rate it.


Someone recommended to me that I should get 'gap insurance' for my new car. What is that and should I really get it?


GAP insurance covers you against a significant loss if your new car is totaled in an accident. Most auto insurance policies will cover the actual cash value of the vehicle which for a brand-new car is less than what you just paid for.

Let's say you bought a $35,000 car in January, put down $2,000 and finance $33,000. After two weeks you total your car (no matter whether you are at fault or not) and you still own $33,000. However, according to KellyBlueBook your 'used' car is only worth $32,000.
The insurance will pay you $32,000 and you just lost $3,000!

Gap insurance will pay you these $3,000.

Gap insurance is most important in the early years of a loan or lease when the value of the car may be less than what you owe on it. Some manufacturers now include gap insurance in their leases. However, if you purchased using a loan, you may want to buy gap insurance.


2007-01-08, 19:28:12
[hidden] from United States  
Excellent article. It's my first time financing a car and your comments make good sense and were very helpful in my decision to buy the Gap policy.
2007-01-19, 05:30:04 from Saint Louis in Missouri, United States  
my financial situation recently changed dramatically,and I had to return my truck to the dealer.Will my gap insurence cover the diffrence between what I owe,and what the truck appraised for????



NEW: Optional: Register   Login
Email address (not necessary):

Rate as
Hide my email when showing my comment.
Please notify me once a day about new comments on this topic.
Please provide a valid email address if you select this option, or post under a registered account.

Show city and country
Show country only
Hide my location
You can mark text as 'quoted' by putting [quote] .. [/quote] around it.
Please type in the code:

Please do not post inappropriate pictures. Inappropriate pictures include pictures of minors and nudity.
The owner of this web site reserves the right to delete such material.

photo Add a picture: