Benefits of total loss GAP protection include not having to continue making payments on a totaled car that technically doesn't exist, protecting the insured vehicle against theft and defacement, and protecting the policyholder from a major financial loss, according to CarsDirect. Depending on how much of a down payment a car buyer makes for the vehicle, he may be required to have GAP insurance.Continue Reading
GAP insurance is designed so that a car owner is covered for the difference between a vehicle's current value and the amount owed on the car in the event that the car is involved in an accident and declared a total loss by an insurance company, notes CarsDirect. Without GAP insurance, the owner has to cover the difference on his own, which can result in financial difficulties. Depending on the specific policy, GAP insurance might also cover the theft or defamation of the insured vehicle.
An individual who is leasing a car might also be required to have GAP insurance, reports CarsDirect. Even if a GAP policy isn't mandatory for a leased vehicle, taking out a policy is a good idea in case an insurance company isn't willing to pay for a total loss claim. No matter the circumstances, everyone who has GAP insurance should read the policy and its fine print.Learn more about Credit & Lending