Gap Insurance: Standard On Chevrolet?

Chevrolet GAP Coverage can provide added financial protection in the event of a total loss by covering the difference between what you owe on your finance agreement and what your primary insurer pays. This includes your deductible and is the only GAP Protection endorsed by Chevrolet and General Motors. GAP insurance is not required by state law, but it may be required by lenders and lessors. It is worth noting that GAP insurance is optional and not included as standard on Chevrolet vehicles.

What is GAP insurance?

Guaranteed Asset Protection (GAP) insurance is an optional product that covers the difference between the amount you owe on your auto loan and the amount your insurance company pays out if your car is stolen or totalled.

Standard auto insurance policies cover the depreciated value of a car, paying its current market value at the time of a claim. However, if you've only made a small deposit on a new car, the loan amount may exceed the market value of the vehicle. In the event of an accident, theft, or damage, GAP insurance covers the difference between what a vehicle is currently worth (covered by standard insurance) and the amount you still owe on it.

GAP insurance is particularly useful if you've made less than a 20% down payment, are financing for 60 months or longer, have leased the vehicle, have purchased a vehicle that depreciates faster than average, or have rolled over negative equity from an old car loan.

Chevrolet offers GAP Coverage, which provides financial protection in the event of a total loss. This plan can help cover the amount you owe on the vehicle that your insurance doesn't, and it's available for new or pre-owned vehicles at the time of purchase.

When is GAP insurance needed?

GAP insurance is needed when the payment for a total loss is less than the outstanding loan or lease balance. This type of insurance is optional and is designed to cover the difference between the depreciated value of the car and the loan amount owed if the car is involved in an accident.

GAP insurance is worth considering if you have made less than a 20% down payment, have a long finance period, or have leased the vehicle. It is also a good idea if you have purchased a vehicle that depreciates faster than average. GAP insurance can protect you from potentially negative financial consequences if the vehicle is declared a total loss.

On the other hand, you may not need GAP insurance if you have made a substantial down payment on the car (at least 20%), are paying off the loan in less than five years, or if the vehicle is a make and model that typically holds its value well.

It's important to note that GAP insurance is only applicable when you owe more on your car than its current value. If there is no "gap" between the amount you owe and the car's value, then GAP insurance may not be necessary.

Chevrolet offers GAP coverage, endorsed by both Chevrolet and General Motors, for up to 8 years and with no maximum dollar amount on covered losses. This coverage is available for new or pre-owned vehicles at the time of purchase.

How much does GAP insurance cost?

The cost of GAP insurance depends on the underwriter and how you purchase it. Dealerships and lenders charge higher prices than car insurance companies. Dealerships and lenders typically charge a flat rate of between $500 and $700 for GAP insurance, and this will be rolled into your loan, meaning you will pay interest on the sum.

Insurance companies, on the other hand, charge an average of $20 to $40 per year for GAP insurance when it is bundled into an existing insurance policy. This will only increase your comprehensive and collision insurance cost by about five to six per cent. If you want to buy a standalone GAP insurance policy, you can expect to pay between $200 and $300.

The cost of GAP insurance is also based on your vehicle and your driving profile. Larger loans can lead to more expensive GAP insurance, as the insurance is based on your loan and your vehicle's expected depreciation.

Where can you buy GAP insurance?

If you're buying or leasing a new car, you can get GAP insurance from the dealer or your auto insurance company. Usually, GAP insurance is optional if you're financing a purchase, but it might be mandatory if you're leasing a vehicle.

When you buy or lease a car, the dealer will likely ask if you want to purchase GAP insurance when you discuss your financing options. Buying GAP insurance from a dealer can be more expensive if the cost of the coverage is bundled into your loan amount, which means you'd be paying interest on your GAP coverage.

You can typically add GAP coverage to an existing car insurance policy or a new policy, as long as your loan or lease hasn't been paid off. Buying GAP insurance from an insurance company may be less expensive, and you won't pay interest on your coverage. If you already have car insurance, you can check with your current insurer to determine how much it would cost to add GAP coverage to your existing policy. Note that you need comprehensive and collision coverage in order to add GAP coverage to a car insurance policy.

You can also purchase GAP insurance from a company offering stand-alone GAP insurance policies or from the bank/financial institution that offered you a loan for purchasing your car. As the rates vary from one insurance provider to another, it is advised to compare quotes from multiple sources before making the purchase.

Is GAP insurance worth it?

Whether or not GAP insurance is worth it depends on several factors. GAP insurance is supplemental coverage that pays the difference between your car's actual cash value and the amount you currently owe on your loan or lease when your car is totaled in a traffic accident or stolen. It is fairly inexpensive and can be purchased through your insurance provider as an add-on coverage, through an insurance company that provides GAP insurance for a one-time fee, or your dealership or lender may provide GAP insurance through your loan payments.

• Do you owe more on your auto loan than your car is worth?
• Did you make a small down payment or put nothing down for your new car?
• Did you take out a loan with a term longer than two years?
• Do you drive more than the average person in your area?
• Are you leasing your car?
• Does your car depreciate faster than other cars?

If one or more of these situations apply, GAP insurance may be a good decision. However, GAP insurance may not be necessary if any of the following are true:

• You made a down payment of at least 20% of the car's value at the time of purchase.
• You expect to pay off your car loan in less than five years.
• You financed or leased a vehicle that holds its value longer than most.

The cost of GAP insurance depends on several factors, including the actual cash value of your vehicle when you purchase the policy and your previous claims history. It is typically offered for a flat fee of $500 to $700, or as a monthly add-on to your insurance policy for $20 to $40.

In summary, GAP insurance can be worth it if you are concerned about the financial impact of your new vehicle being totaled or stolen, and you meet one or more of the criteria listed above. However, if you have a substantial down payment, expect to pay off your loan quickly, or have a vehicle that holds its value well, GAP insurance may not be necessary.

Frequently asked questions