GAP insurance protects a vehicle’s lease or loan and sometimes it can also be held responsible for paying one’s usual insurance deductibles. It provides important protection during early years of car’s life if one has a lease or a loan. In the event of any loss, ‘GAP insurance’ will pay differences between real cash value of car and present outstanding balance on lease or loan.
If one’s car has met with some accident, tornado, hurricanes, vandalism, theft and accident, his or her insurance provider typically has to pay the real cash amount which can be less to its real retail value. Often, it is significantly a smaller amount than real cash value one still owes on loan or amount unpaid for lease payoff.
In other words, the total amount between loss from monetary shortfall and insurance deductible is the ‘gap’ one may be left holding.
Most vehicle owners think that their car will get replaced at similar amount they paid initially, but it is not so. Most car insurance firms provide the option of Lease or Loan Gap insurance as an additional coverage which is made available with car damage coverage. In case, carrier is not offering this service, car owners can buy it.