What is Gap Insurance?

Most League City drivers who have full-coverage insurance policies feel secure in their coverage, believing that if their car is totaled they won't have to worry about paying off the loan. Insurance will cover that, right? Not so fast. What if the car is now worth less than the amount left on the loan? This is why it's important to understand what gap coverage is and if you require that kind of coverage on your vehicle. At Bayway CDJR, we want to make sure you know exactly what coverage you need on your next vehicle. If you've ever found yourself asking "What is gap insurance," read below to learn more. 

What is Gap Protection?

To understand what gap protection is, it's important to understand what full coverage insurance offers. The "full" in full coverage refers to the full market value of your vehicle at the time it was damaged or totaled. The problem is, you may owe more on the car at the time than what it is worth. Normally, you would be responsible to pay the difference or "gap" between the vehicle's market value and what you still owe on it. This is what gap insurance on a car is meant to cover. It will pay that difference or "gap" under certain circumstances.

What is Gap Insurance on a Car?

If you find yourself wondering "What does gap insurance cover?" Bayway CDJR is here to answer your questions. Gap insurance will kick in when your car is damaged or totaled by the following:

  • Theft
  • Fire
  • Vandalism
  • A traffic accident
  • A natural disaster

Do I Need Gap Insurance on My Car?

We recommend gap insurance to when the following applies:

  • Your car is leased.
  • The down payment on your loan was less than 20%.
  • Your loan was for 5 years or longer.
  • Your latest loan includes the payoff amount of an older loan.

Confused? Bayway CDJR Is Here to Help

Now that you have the answer to questions like "What is gap insurance on a car," or "What is gap protection," the finance department at Bayway CDJR can help you review your loan to see if you would benefit from purchasing gap insurance. Visit us today to learn more about our insurance and financing offers! We're located conveniently near La Porte and Houston. So come in for a test drive or contact us today!

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