GAP Insurance

What is GAP Insurance?

GAP stands for Guaranteed Auto Protection. GAP insurance literally covers the gap between what you owe on a car and what it’s worth if your car is totaled in a covered loss, such as an accident or theft.

Who Needs GAP Insurance?

If you purchased a new or used vehicle and weren’t able to afford a large down payment, you may need gap insurance. The moment you drive your new or used car off the lot, the car’s value depreciates—sometimes as much as 20% - 30%! If you’re not able to pay the difference between what you owe and what your vehicle is worth out of pocket, GAP insurance is worth considering.

How GAP Works!

Let’s say you total your car while swerving to avoid a deer—no one is hurt but your car rolled into a ditch. The cost to repair your car is higher than its actual cash value (ACV). Your insurance company decides to total your car and runs a N.A.D.A. valuation and determines that your car’s ACV is $10,000.

Your original amount borrowed is $18,000 and at the time of the accident you owe $15,000.

You owe	$15,000
Your Insurance says your car’s ACV is	$10,000
Your primary insurance deductible is	$500
	————
Your total out of pocket expense is	$5,500
GAP coverage will pay	$5,500
The total you owe with GAP Coverage to payoff your loan is	$0

MCU recommends talking to your personal financial officer about GAP insurance when you purchase your next car.