What is a GAP and How to Apply for It?

GAP insurance – Guaranteed Asset Protection- is an additional insurance that is recommended when applying for a car loan or leasing a car.
This type of insurance protects the policyholder from financial losses that may occur if the value of the car after an accident or theft falls below the remaining amount under the loan or lease agreement. GAP insurance compensates for the difference between the residual value of the car and the remaining amount needed to repay the loan or lease. Thus, it provides additional financial protection for car owners and lessees.
Guaranteed asset protection, or GAP, essentially fixes the cost of the car at the time of policy purchase, so the vehicle stops getting cheaper over time (as it usually does). Upon the occurrence of an insured event, the owner of such a policy will receive the amount specified in the contract.
You can apply for GAP insurance for new cars from an insurance company.
The initial cost of the car is taken as the basis for calculations when making a GAP, which, depending on the terms of the contract, can be expressed in any currency (euro, US dollar, etc.).
When GAP is in effect
GAP is valid for insurance cases:
- Car theft
- Complete vehicle loss
It works like this:
- When an insured event occurs, you will be paid an indemnity calculated on the basis of the original value of the car, excluding depreciation;
- With GAP insurance you can expect to receive the full amount, regardless of the degree of wear and tear of the vehicle.

Why GAP is profitable
The amount of coverage is not reduced, as in standard insurance.
It is possible (and necessary!) to insure a car that is on loan or leased, so that if the car is lost, the owner will be able to fully refund the money.
GAP insurance for car loans is beneficial because you can be sure that your debt obligations to the insurance bank are fully covered. Therefore, experts recommend enabling this option, especially if you are buying an expensive vehicle.
The need for GAP coverage arises from the fact that the cost of a vehicle decreases over time. The loss of value is due to “depreciation”. When a vehicle is stolen or destroyed, the insurance company usually estimates the value of the vehicle at the time of loss. This amount may be significantly less than the initial purchase price of the car or the outstanding loan balance.
GAP coating is especially recommended for expensive vehicles such as mid-range or luxury models. However, this type of insurance also provides protection against payment obligations and liquidity problems, even with small loan amounts.

Premium cars lose value very quickly: in the first year, wear reaches 25% of the car price, the second year adds 15%, in the third — about 10%. It turns out that the car has just been tested, but has already lost almost a third of its value. GAP will keep the original price in case of loss of the car.
According to insurers, cars with powerful engines are most often involved in “total” accidents, so it makes sense for fans of fast driving to think about such an extension of the standard hard hat.
You can already apply for Affordable GAP insurance online.
Is it possible to do without GAP
If you are a careful driver, leaving your car in a secure parking lot, thereby potentially protecting yourself from total loss of the car, then perhaps the GAP is of less value to you, since in case of an insured event it will be possible to make do with repairs.
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