What is “GAP” Coverage for My Car?
ANSWER:
“GAP” stands for Guaranteed Auto Protection Insurance Policy. It serves an essential purpose: it covers the difference between the remaining balance you owe on your car loan and the actual cash value (ACV) of the car as determined by an insurance company.
Example Scenario: Consider this situation: you are driving through Provo Canyon and are involved in a severe head-on collision. The accident leaves you injured, unable to walk or work, and struggling to pay your car loan. Let’s break down the financial impact:
- Original car price: $20,000
- Remaining loan balance: $15,000
- Fair market value of the car post-accident: $10,000
Although you still owe $15,000 on the vehicle, the insurance company of the at-fault driver will only pay the car’s current fair market value—$10,000. This creates a $5,000 gap between what you owe and the value covered by the insurance payout.
How GAP Insurance Helps: GAP insurance steps in to pay this $5,000 shortfall, ensuring you are not left making loan payments for a vehicle that’s no longer drivable or in your possession.
Why Is GAP Coverage Important? Cars depreciate quickly, especially within the first few years of ownership. If your car is totaled in an accident, this type of policy protects you from being financially liable for the “gap” between your insurance settlement and the outstanding loan balance.
Legal Assistance: A skilled Provo car accident attorney, like Jacob S. Gunter, can assist with the property damage claim alongside your personal injury case. This includes navigating any complexities involving your GAP coverage to ensure your financial stability.
Free Legal Consultation: For advice tailored to your situation and help with the aftermath of a car accident, reach out to attorney Jacob S. Gunter. Call for a free consultation at (801) 373-6345.