will gap insurance cover my car being stolen?

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Asked December 9, 2015

1 Answer

Gap insurance, or Guaranteed Auto Protection, will indeed cover you if your car is stolen. Gap insurance is designed to cover the difference between what you owe an the fair market value of your vehicle. As far as coverage goes, the vehicle stolen is covered the same way it would be if the vehicle were totaled in an accident. Gap insurance is not the same thing as your regular car insurance, which is comprehensive, collision or both.

Gap insurance is only need then if you have a car loan. Most insurance covers only the fair market value" of the vehicle. Cars depreciate in value fairly quickly. For instance, a $25,000 new car would have a fair market value of a few thousand dollars less the minute you drive it off the car dealer's lot. In a couple of years, the fair market value may be only half of what you paid. So if you have your car for four years and it gets totaled, it might only be worth $15,000 and you might still owe $18,000, which means you would be left with paying $3,000 for a car you no longer have.

If you have a conventional car loan, you may still owe much more than the car's value, so you could get a lot less money from the insurance claim than what you owe. That is the reason to have gap insurance. Gap insurance is not the same thing as car insurance, it is more of an insurance for your car loan, to make sure you don't end up having to pay for a car you no longer have.

Leased vehicles often require you to have gap insurance. If you make a make a small down payment and finance a large part of the purchases, gap insurance is even more important.""

Answered December 11, 2015 by kris721

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