What is Gap Insurance?

Auto Financing Paperwork and Money 

Gap insurance can be a financial lifesaver, yet the specifics are far from simple. So what is Gap insurance? And specifically, what is Gap insurance on a car? Short for Guaranteed Asset Protection Insurance, Gap insurance coverage makes up the difference between what your main insurance company determines the car is worth and what is still owed on your loan.


What Else Does Gap Insurance Cover?

What is Gap protection and how does it work? Apart from covering the difference of your vehicle's value and the amount you owe on it, Gap insurance covers a lot more to protect your vehicle on Chicago streets. While it doesn't cover bodily injuries, mechanical repairs, or your deductible, it covers:

  • Theft
  • Fire
  • Vandalism
  • Accidents
  • Nature damages (tornado, hurricane, flood, etc.)

Having this type of coverage comes in handy when regular insurance won't cover all of these unexpected inconveniences. You never know when you're going to need it, so it's better to be prepared with gap insurance.

Auto Finance

 

Is Gap Insurance Worth It?

Absolutely! Having Gap insurance means protecting your vehicle investment when something out of the ordinary occurs, like the theft of your vehicle. And since your vehicle depreciates the second you drive off the lot, this insurance will cover the gap between the worth of your vehicle and what your insurance will cover if you get into an accident near Chicago during another chaotic midwest winter.

An Example of How Gap Insurance Works

Let's say your vehicle gets stolen in Wrigleyville while you're at a Cubs-Sox crosstown classic and your main insurance doesn't cover the entirety of your loss. If you owe more on your car loan than you received from your main insurance company, then you're out of luck, correct? Not if you have Gap insurance, which would cover the difference between what your insurance determined your vehicle was worth and the money still owed on your car loan.

How Can I Get Gap Insurance?

Your auto insurance company probably offers Gap insurance, regardless of whether your insurance is through your trusted car dealership or an outside company. How much does Gap insurance cost? Often, as little as $20 a year plus a one-time fee at the time of purchase.

Learn More at Honda City Chicago

Insurance, in general, can be a confusing concept, so feel free to reach out to the finance department at Honda City Chicago near Chicago with any questions whatsoever. Among our services, our finance center offers credit-score advice, an online loan application, and has the inside info on our latest financing specials. You can even learn more about what is good mileage for a used car. If you've had your eye on a new 2019 Honda Civic or a pristine, used 2014 Honda Pilot Touring SUV, our finance gurus can help you figure out the best strategy to buying a car.