Do gap insurance cover stolen car? This is a question that many car owners often ask themselves, especially when they are considering purchasing a comprehensive auto insurance policy. Gap insurance, also known as guaranteed auto protection (GAP), is designed to bridge the gap between what your car is worth and what you owe on your auto loan in the event of a total loss, such as theft. In this article, we will explore whether gap insurance covers stolen cars and how it can benefit you in such situations.
Gap insurance is a type of insurance that pays the difference between the actual cash value (ACV) of your car and the outstanding balance of your auto loan or lease. When your car is stolen, your primary insurance coverage, such as comprehensive insurance, will pay out the ACV of your car. However, if the ACV is less than the remaining balance on your loan, you are still responsible for the difference, which can be a significant financial burden.
That’s where gap insurance comes into play. If you have gap insurance, it will cover the difference between the ACV of your stolen car and the remaining balance on your loan. This means that you won’t be left with a large debt to pay off after your car has been stolen. Gap insurance can provide peace of mind and financial protection in the event of a total loss due to theft.
It’s important to note that gap insurance only covers the difference between the ACV of your car and the remaining balance on your loan, not the entire amount of the loan. This is because gap insurance is designed to cover the gap, not to pay off the entire loan. Additionally, gap insurance typically only covers cars that are less than five years old and have less than 75,000 miles on them.
When considering gap insurance for your stolen car, it’s crucial to understand the terms and conditions of your policy. Some gap insurance policies may have specific requirements, such as the car being reported stolen within a certain timeframe or the car being repaired or replaced within a certain period. Make sure you read your policy carefully and ask your insurance provider any questions you may have.
In conclusion, do gap insurance cover stolen car? The answer is yes, they can. Gap insurance provides an essential layer of protection for car owners who want to avoid the financial burden of an unpaid loan in the event of a stolen car. By understanding the terms and conditions of your gap insurance policy, you can ensure that you are adequately protected in the event of a total loss due to theft.
