Since the very first vehicle insurance policy, many drivers have learned the hard way that a standard insurance policy may not provide all the financial protection they need.
Here’s why: When the value of a vehicle is less than the balance of the loan, this is described as being “upside down” on the loan.
A special kind of protection called “GAP protection” may help to cover the difference.
Negative Equity Puts Buyers at Risk
GAP protection is designed to help cover the difference between the fair market value of your vehicle at the time it’s totaled and your outstanding loan balance. Here’s an example using a typical loan:
Amount you owe on your loan: $20,000
Vehicle book value at the time of loss: $18,000
Your insurance deductible: $500
Amount insurance company pays you: $17,500
The "GAP": $2,500*
* The actual benefit amount paid to you is determined only at the time of loss per the terms described in the deficiency waiver addendum and may not cover the entire outstanding loan balance due to any listed exclusions including any limitations based on the loan-to-value coverage of 150%.
Highlights of Rider's Advantage GAP Include:
Not everyone needs GAP protection. However thanks to significant changes in the way motorcycles, powersports, RVs, trailers, and watercraft are purchased and financed, more and more consumers are finding it may be beneficial to purchase GAP.
