Top 10 Gap Insurance

Gap insurance, or Guaranteed Asset Protection insurance, is a type of auto insurance that covers the difference between the amount owed on a car loan or lease and the car's actual cash value in the event of a total loss. This coverage is particularly useful when the car's value depreciates faster than the loan or lease balance.

In the event of an accident, theft, or other significant damage that leads to a total loss, standard auto insurance typically pays out the car's current market value, which may be less than the amount remaining on the car loan or lease. This discrepancy can leave the car owner with a substantial out-of-pocket expense to settle the remaining loan balance. Gap insurance steps in to cover this "gap," ensuring that the car owner isn't financially burdened by the difference. This type of insurance is especially beneficial for those who finance their vehicles with little or no down payment, or for those who lease their cars, as these scenarios often result in a higher likelihood of owing more than the car's depreciated value in the early years of ownership. It's worth noting that gap insurance is generally optional but can be a wise investment for protecting against unexpected financial strain.