GAP Insurance Explained

Pacifica driving on road

Is the amount you receive from your insurance company enough to pay off your loan or lease balance if your vehicle is declared a total loss?

Example Insurance Settlement

Market Value of Vehicle – $13,000
Less Your Insurance Deductible – $1,000
Proceeds from Insurance Company – $12,000
Amount You Owe on Loan or Lease – $18,500
Proceeds from Insurance Company -$12,000
The Difference – $6,500

In this example, the answer is No! The difference illustrates what you would still owe your lender without GAP.

What is Gap Protection?

What Guaranteed Asset Protection (GAP) Pays

In the unfortunate event your vehicle is declared a total loss due to an unrecoverable theft or accidental damage, your auto insurance company will typically pay the current market value of your vehicle less your deductible. But what if your loan or lease balance is higher than the market value of your vehicle? Answer: You would be responsible for paying off the difference, including your deductible. This can be expensive.

The reason for the potential difference is that normally the loan/lease balance decreases at a predictable amount as monthly payments are made. However, the market value of your vehicle is influenced by several variable factors (e.g. supply, demand, mileage). This means that market value often may be lower than your outstanding balance – particularly early in your contract when you have the most to lose.

GAP can help waive the difference, including up to $1,000 of your insurance deductible.

The Choice is Yours

GAP is an optional form of protection available only at the time you sign your Retail Finance or Lease Contract with the dealership. If you would like to know more about GAP, ask to see the GAP agreement. Besides the limitations listed at the right, terms and conditions may vary by state.

Payment of Deductible

GAP only provides a benefit if there is a balance due on the loan or lease after the insurance settlement. If there is no balance due, we will not pay your deductible.


GAP coverage is terminated if the Retail Finance or Lease Contract is refinanced.

Settlement Deductions

GAP waiver amount does not include insurance settlement deductions for customer retained salvage, unrepaired physical damage, towing, rental or storage.

Non-Covered Finance Items

GAP waiver amount does not include late payments, deferred payments, late charges/interest or interest after the date of loss.

Lost Equity

GAP does not refund advance payments or vehicle equity.

Uncancelled Add-Ons

GAP waiver amount does not include the refundable portion of any finance additions such as credit insurance or service agreements.

Customer Secured Financing

GAP does not apply to any loan obtained from any finance source other than the dealer.


GAP does not provide any insurance coverage for you or the vehicle, such as collision, comprehensive, bodily injury, property damage or liability. You must have or obtain physical damage insurance on your vehicle at the time of purchase in order for GAP to be effective. GAP is not a replacement for primary auto insurance.