What is GAP Insurance?
When purchasing a new or used vehicle in Houston, protecting your investment is essential. But what happens if your car is totaled or stolen and you owe more on your loan than the car’s current value? That’s where GAP insurance comes in. So, what is GAP insurance, and how does it benefit you?
Understanding GAP Insurance
What is GAP insurance on a car? GAP stands for Guaranteed Asset Protection, a type of coverage that helps bridge the “gap” between your vehicle’s actual cash value and the amount you still owe on your loan or lease. If your car is declared a total loss due to an accident or theft, standard auto insurance only pays for the vehicle’s market value—not the remaining balance on your loan. This means you could still owe thousands of dollars out of pocket.
What is GAP Protection, and Why Do You Need It?
Many Porter drivers assume their standard auto insurance will cover the full cost of their vehicle in a total loss situation. However, depreciation can quickly reduce a car’s value, leaving you financially vulnerable. What is GAP protection, and why should you consider adding it to your coverage plan?
- Protects Against Depreciation: Vehicles lose value the moment they leave the dealership. GAP insurance ensures you’re not left paying the difference.
- Covers Loan and Lease Balances: If your car is totaled or stolen, GAP protection covers the remaining balance on your loan or lease.
- Prevents Financial Hardship: Avoid paying thousands out of pocket if your insurance payout isn’t enough to cover your loan.
- Recommended for New Caney New Car Buyers: If you finance a large portion of your vehicle’s purchase price or have a long-term loan, GAP insurance is a smart investment.
What is GAP Insurance on a Car, and How Does It Work?
Now that we’ve answered what GAP insurance is, let’s break down how it works:
- You purchase a vehicle and finance it through a lender.
- Over time, your car depreciates, and its value decreases.
- If your car is stolen or totaled, your standard insurance pays only the car’s current market value.
If you owe more than your car’s value, GAP insurance covers the remaining loan balance.
Get GAP Insurance at Texan GMC Buick
Now that you understand what GAP protection is, you can decide if it’s right for you. If you’re financing a vehicle, our Humble team can help you explore your coverage options. Contact us today to learn more about GAP insurance on a car.