Auto Insurance in Napa, CA

What Is Gap Insurance and How is it Related to Auto Insurance?

Gap insurance, also known as guaranteed asset protection insurance, is an optional type of auto insurance coverage that can benefit vehicle owners, especially those who lease or finance their vehicles. It can help provide an additional layer of financial protection that standard auto insurance policies may not fully cover.

Gap insurance is designed to cover the “gap” between the actual cash value of a vehicle and the amount owed on a car loan or lease in the event of a total loss.

Who Can Benefit From Gap Insurance?

Gap insurance may be required by lienholders if you finance or lease your car. If you finance your vehicle with a loan that exceeds the vehicle’s value, gap insurance can protect you from owing money on a car you no longer possess.

New vehicles typically depreciate rapidly in their first few years. Gap insurance can bridge the gap between the vehicle’s value and what you owe if it’s totaled early in its life.

Is Gap Insurance Worth It?

Determining whether gap insurance is worth it depends on your individual circumstances. If you owe more on your loan or lease than your vehicle is worth, gap insurance can generally provide crucial financial protection.

New vehicles and vehicles with high depreciation rates may benefit more from gap insurance.

When considering gap insurance, think about whether you could comfortably cover the difference between your insurance settlement and your loan/lease balance in the event of a total loss.

How to Get Gap Insurance in Your Auto Insurance

Contact Compass of California Insurance Services in Napa, California, to get a personalized auto insurance quote that includes gap insurance coverage.