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How GAP Can Reduce Your Financial Risk

Many people put themselves at great financial risk by not having adequate auto insurance coverage. Lenders now tend to require additional insurance to pay off any balances owed on car notes in case of accidents.

GAP stands for “Guaranteed Auto Protection,” which is important when leasing a car, especially since there is no major down payment compared to purchasing a car.

In the event of an accident, your insurance policy will only cover the current market value of the car, which means you’re responsible for the amount owed to the finance company. This can create a gap in coverage, burdening you with financial difficulty on top of the stress of the accident itself.

Since depreciation can outpace car payments, GAP insurance is a must when leasing, because it protects you and your financial profile. Fortunately, GAP is already included in the majority of lease contracts. It’s important to clarify whether or not GAP is part of the lease or sale when signing the contract.

The GAP Advantage

Consider the following scenario: you purchase a car for $25,000 including taxes and fees and roll off the lot. One year later, you’re involved in an accident, totaling the car. Since insurance covers the current market value of the car, they pay for $17,500, which reflects a loss of approximately 30 percent of its value within a year. Regardless of the amount left on your loan, with GAP insurance, you’re only responsible for the $500 deductible and they’ll cover the difference.

However, imagine if you didn’t have GAP insurance and you still owed $23,500 on the vehicle. There’s still a $6,000 “gap” between what you owe for the car and the $17,500 insurance will pay. Without GAP insurance, you’re responsible for that payment, even if the car is totaled. The difference is a $500 deductible versus $6,000.

GAP insurance reduces your financial risk by covering damage due to drastic events such as theft, vandalism, fire, hurricanes, floods, accidents, and tornadoes. Generally, your insurance deductible will also be covered. It’s important to note, however, that cars covered by both comprehensive and collision insurance are not covered by GAP. Furthermore, any equipment not factory installed into the vehicle, such as a GPS system, will be excluded from protection.

With so many benefits for GAP insurance, it’s no wonder more drivers and leasers are considering whether they should purchase it – if it’s not already part of their contracts. Consider adding GAP to your policy if:

  • You place little or no money down. Whether you’re purchasing a new or used car, the more you borrow, the more you’ll pay in interest. As a result, it takes more time for the loan balance and the cash value of your car to become equal.
  • Your loan is 5 years or longer. An extended term increases the payoff amount, which leaves you vulnerable in the event of an accident. In that situation, you might owe more than the car is worth, especially if it’s completely totaled. Having GAP insurance will protect you from this unfavorable situation.
  • You have a high interest rate. If you purchase or lease a car with low credit, you might end up with a high interest rate loan. Since high interest rates can inadvertently extend the length of your loan, GAP insurance is an appropriate option.

With so many available insurance options and considerations, it’s important to understand the various ways to protect yourself when purchasing or leasing a vehicle. Whether you have bad credit or are in the process of improving credit, it’s critical to find trusted advice before making a major decision.

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20 Comments

Gravatar Jessica Davis

How would you know if you have GAP in you contract. Is it apart of the new protection plan?

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Gravatar Marcus Johnson

Question what if you didn’t have ci.l and collision but you had liabilty… because I had completely and Collison they drivetime or so I thought but it expired and they didn’t notify me at all… What will Gap Cover since there is no insurnace???

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Gravatar DriveTime

Hi Marcus – If you are looking for information on GAP (Guaranteed Asset Protection), you can find it here or give our Customer Relations team a call at 800-965-8043! Thank you. – Tiffany | DriveTime Community Manager

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Gravatar Gussie

I have the GAP in my contact got into accident but don’t know to contact the program. I guess I’m just stress out. I don’t know what steps to take.

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Gravatar Mario Smith

Hello Gussie,

Thank you for submitting your questions. With this process, if you have already contacted your primary insurance and you did purchase the GAP coverage you will need to contact Bridgecrest (our loan servicing company) at (800) 967-8526 and they will be able to direct you to the GAP department. They will also be able to advise you who your GAP provider is and what their direct contact information is.

Please let us know if there is anything else we can assist you with.

Thank You,
Missy – Customer Relations

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Gravatar Jariya Ritch

how long does it typically take to process a GAP claim and zero out your auto loan balance?

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Gravatar Mario Smith

Hello Jariya,

Thank you for reaching out!

Please know that it can typically take anywhere between 4 to 6 weeks to completely process a GAP claim and zero out a customer’s account balance.

If you have any further questions about the total loss/GAP process, please feel free to contact your GAP administrator.

Thank you,
Jacob – Customer Relations

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Gravatar brooks davies

I recently purchased a vehicle, and did get the GAP insurance, I have USAA insurance and the car replacement assistance on my policy. My question is, if the car is totaled etc. there policy would pay the market value of the vehicle, plus 20% for a new car etc.. would the GAP purchased with vehicle cover the rest? or I can’t have both?
I’m confused…please steer me in the right direction.

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Gravatar Mario Smith

Hello Brooks, thank you for reaching out!

Please know that the GAP coverage we offer is intended to cover the balance that is left over after the insurance company pays their portion of the loan balance in the event of a total loss. It is not intended to assist with the cost of a replacement vehicle.

For any additional questions regarding the vehicle replacement program you mentioned, I would recommend reaching out to your insurance company, as we would not be involved in that process.

Thank you,
Jacob – Customer Relations

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Gravatar Liza Stellfox

I was just involved in an accident and we have Gap insurance through Silver Rock. I was wondering if my $500 physical insurance deductible will be paid by the Gap insurance?

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Gravatar Mario Smith

Hello Liza,

Thank you for reaching out.

Unfortunately no, the Gap insurance is not intended to cover insurance deductibles in the event of an accident. Please know that Gap coverage is a product designed to assist you with any account balances that remain in the event that your insurance provider were to deem your vehicle a total loss.

If you have any further questions, or you simply wish to discuss this matter further, I would strongly encourage you to reach out to SilverRock directly.

Thank you,

Jacob – Customer Relations

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Gravatar Maggie

Totaled my car.
Insurance paid out 11K.
I owed 14K.
I didn’t have GAP….. now what?
Am I coming into a car buying situation with a negative downpayment? that sounds like a terrible idea, my credit wasn’t good before– definitely not good enough for two auto loans on it….

Will anyone refinance the remaining 4k without a car behind it… that sounds like a no advantage situation for them, but with 10k recently taken off the bill — I should be eligible for lower payments and APR…..

I am so lost, I need a car to keep up with everything else necessary to get this taken care of which is a weird situation in and of itself.

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Gravatar Mario Smith

Hello Maggie,

Thank you for reaching out to us! I am saddened to hear that this has occurred and hope that everyone is okay!

In regards to your current options, it is difficult to speak in detail since we are in a public forum. I encourage you to contact your local DriveTime dealership (which you can locate on our website ) to speak more thoroughly about your options.

Again, I hope that everyone is okay and want you to know that we would like the opportunity to earn your business.

Thank You,

Kaitlyn – Customer Relations

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Gravatar Imaginethat1159@gmail.com

Hi, I’m currently waiting on silverrock to process my gap claim. The problem is that bridgecrest has already taken 3 months to process my insurance claim, meanwhile I have been unable to purchase another vehicle and have been without one since mine was totalled by a hit and run driver. Is there any help or way I can get into another car while thus long process plays out?

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Gravatar Mario Smith

Hello Kerri,

I want to apologize again for the delay in your claims being processed. In order to see what options you may have available, I encourage you to contact your local DriveTime dealership to check into your available options!

Thank You,

Kaitlyn – Customer Relations

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Gravatar Imaginethat1159@gmail.com

Hi,my name is Kerri, I’m currently waiting on silverrock to process my gap claim. The problem is that bridgecrest has already taken 3 months to process my insurance claim, meanwhile I have been unable to purchase another vehicle and have been without one since mine was totalled by a hit and run driver. Is there any help or way I can get into another car while thus long process plays out? Thanks carless …..

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Gravatar Mario Smith

Hello Kerri,

Thank you for reaching out to us. I want to apologize that the insurance and GAP process is taking some time to close and can understand full well how difficult it is to operate without your vehicle as transportation. I encourage you to contact your local DriveTime dealership and see what options are available for you while your current vehicle is being closed out.

Thank You,

Kaitlyn – Customer Relations

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Gravatar Annie E.

I have the Gap on my account. I was recently in an accident that did not total my car but left my front end a wreck. My insurance is only covering 60% of the cost of repairs leaving me with over 1200 to pay. Would GAP be able to help with some of the cost left over.

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Gravatar Mario Smith

Hello Annie,

Thank you for reaching out to us and I hope that you are okay from your recent accident. In regards to your questions pertaining to GAP that you have added into your loan, I would encourage you to reach out to Bridgecrest, your loan servicing provider, at (800) 967-8526. A team member would be able to address all of your questions and concerns.

Respectfully,

Jodi-Customer Relations

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