What is GAP Advantage and Why Do I Need It?
Published: June 15, 2018
Driving a new vehicle off the lot is one of life’s most satisfying experiences. Yet, this honeymoon period with your new vehicle can quickly turn south if you’re involved in a collision and you don’t have sufficient insurance coverage.
Though many people don’t realize it, a standard full coverage insurance policy isn’t always enough to fully cover the cost of replacing a damaged vehicle. If your policy values your vehicle at a number that’s lower than what you owe, you may be responsible for paying the difference.
Fortunately, there’s an easy way to prevent this from happening and it’s called GAP Advantage, or Guaranteed Asset Protection.
What is GAP Advantage?
GAP Advantage is a supplemental insurance program offered to people who are financing new or used vehicles. It works with your standard insurance policy (rather than replacing it) to ensure that you have enough coverage to satisfy your loan obligation.
For example, let’s say you’ve purchased a new car valued at $35,000 and you’ve financed the full price. Then, a few weeks later, you’re in a collision and the vehicle is a total loss.
At the time of the accident, you still owe $35,000 to your creditor. However, due to depreciation, your vehicle car is only valued at $32,000 by your insurer. This leaves a $3,000 gap for which you are financially responsible — even though you have full coverage. Additionally, you’ll also be on the hook for your insurance deductible.
GAP Advantage is designed to cover these types of gaps, allowing new buyers to have the financial peace of mind required to purchase a new vehicle.
The Benefits of GAP Advantage
Vehicle depreciation occurs faster than you might think. Statistics show that most vehicles depreciate 10-percent as soon as they leave the lot, followed by an additional 15 to 25 percent each year after that. Because GAP coverage is relatively low cost (as little as a few dollars each month, potentially), it’s a smart choice for anyone who is seeking to finance a new vehicle. Some GAP policies also offer up to $1,000 toward your down payment for a replacement vehicle.
Signing up for GAP Advantage is simple. You can choose to do so at a dealership, or you can contact your local credit union for help finding the policy that best suits your needs. GAP covers cars, trucks, boats, RVs, jet skis and almost any other vehicle. It only takes a few minutes to sign up, and the cost can often be rolled into your monthly payment.
GAP Advantage helps ensure that you don’t end up owing money after an accident even though you hold full coverage. For more information about how GAP coverage can work for you, contact us today.