Gap Insurance Coverage Definition and Usage
Gap insurance protects against 'upside-down car loans' which happen when the borrower owes more on a vehicle than the vehicle is worth. It's a common occurrence at the beginning of most loans, but totaling your car while the loan is upside-down can be expensive. Here’s how gap insurance coverage can keep you and your savings protected.
What is gap insurance?
If your car is totaled, gap insurance coverage typically pays the difference, or the 'gap,' between what you owe on the car and what that car is worth. Without gap insurance, that expense would be paid out-of-pocket. Of course, the actual coverage may vary by state and by company.
Why is gap insurance important?
Car values don't always change at the same rate that the car is paid off. The value usually decreases quickly at first, then more slowly the longer you own the car. For example, a car that is valued at $15,000 may still have a loan balance of $20,000. If the car is totaled, gap insurance will pay the $5,000 difference.
Who needs gap insurance coverage?
If there is a significant difference between what you owe on a car and the car's value, you should consider gap insurance. Ask your insurance agent about how to determine your vehicle's value, so you know when gap insurance coverage may be necessary. Discuss with your agent whether this coverage makes sense for you.
Does gap auto insurance replace other insurance policies?
No, other types of insurance coverage like liability, collision and comprehensive are still recommended, even if you have coverage from a gap insurance provider like Titan. Talk to a Titan Insurance agent about what coverage is right for you.
Contact Titan about gap insurance
For more information about gap insurance, and other policy options that can keep you protected:
- Call 1-800-TITAN-UP (1-800-848-2687)
- Find a Titan Insurance agent or broker near you
The provided information and safety suggestions were obtained from sources believed to be reliable and is intended for informational purposes only. Titan and its affiliates assume no liability in connection with providing it or your use of it. Your circumstances may not warrant or require some or all of the safety suggestions, and there may be additional available safety procedures that are not referenced on this webpage.