GAP stands for Guaranteed Asset Protection. It works alongside your existing collision and comprehensive insurance coverage by helping cover the difference between your vehicle's actual cash value (ACV) and the remaining balance on your loan or lease after a covered total loss.

Because vehicles depreciate quickly, insurance companies typically reimburse only the current market value of the vehicle—not the amount you still owe on your financing agreement.

For example, if your insurance company determines your vehicle's value is $20,000 but you still owe $25,000, GAP insurance may cover the remaining $5,000 balance (subject to policy terms and limits).

While GAP insurance can benefit many drivers, it may be especially valuable if you're more likely to owe more than your vehicle is worth during the early years of ownership.

GAP insurance is often recommended if you:

• Made a down payment of less than 20%
• Financed your vehicle for 60 months or longer
• Leased your vehicle
• Rolled negative equity from a previous loan into your new financing

Understanding these situations can help you determine whether GAP insurance fits your financial goals and ownership plans.

GAP insurance generally applies when your vehicle is declared a total loss due to a covered event after your primary insurance settles the claim.

Covered situations may include:

• Total-loss collision
• Vehicle theft
• Flood damage
• Hurricane or severe storm damage
• Tornado and other covered natural disasters

GAP insurance does not cover vehicle repairs, injuries, damage to another person's property, routine maintenance, or certain finance charges and fees that may be excluded by the policy.