About Gap Coverage

2012 Mini Cooper

Perhaps you have heard of this Gap coverage. Many drivers get a standard auto insurance policy to cover the cost of replacement parts or repairs if their vehicle is stolen or damaged, as many states mandate that is purchased. What exactly is Gap coverage? You have come to the right place to learn all about gap coverage and how having it can help you!

What is Gap Coverage?

Gap coverage is used mostly on small vehicles, such as trucks and cars, and heavy trucks. It can be used on new vehicles as well as used ones. Gap coverage covers the difference between what you still owe on your vehicle and the car’s worth. Gap coverage is sometimes referred to as “gap insurance” or “gap protection.” Gap is an appropriate name for this type of coverage not only because it covers a “gap,” but because GAP is an acronym for “Guaranteed Auto Protection,” what people are seeking when they purchase Gap coverage.

Gap Coverage Explained

Say you buy a car for $30,000 that you had taken out a loan for. A month later the car is totaled in a crash, but you still owe $30,000 on your loan. Because a new vehicle’s value quickly drops after purchase, the cash value of this once brand-new vehicle may only be $28,000. Your gap coverage, if you have elected to purchase it, will pay the difference, which would be $2,000 because that is what you get when you subtract the car’s current value, $28,000, from the $30,000 remaining loan balance.

If you are not paying a whole lot of money for your vehicle each month, as it will take you longer to pay the vehicle off that way then making bigger payments, then gap coverage may be a good idea to save you money in the long run if something happens to your vehicle while you are still trying to pay back the loan on it.

Who Gets Gap Coverage

Gap Coverage is designed for people who drive vehicles with a high history or depreciation rates, drivers who drive more than 15,000 miles annually (15,000 miles is what the average person drives), and drivers who lease. Sometimes lease contracts do actually require that one purchases Gap coverage.

One should also consider getting gap coverage if they do not have a lot of cash saved up that would cover the difference between the amount you still owe on your loan and the car’s actual cash value if it is totaled or stolen.

Purchasing the Gap Coverage

Buying from the dealership you get your vehicle from can provide you with a one-time charge that you will get out of the way for the part of the car’s life that it spends with you. You will want to be sure that the coverage you get provides types of loss like accident, theft and natural disaster–again, a dealership is your best bet for this.

The folks at a local car dealer, Patrick MINI in Schaumburg, IL, can provide you with more information on available Gap coverage, especially if you are thinking about purchasing a new or used MINI vehicle in the Chicago area.


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