GAP Insurance Might be Your Hero

If you’re ever in a car accident, GAP insurance (which stands for Guaranteed Asset Protection Insurance) could truly save the day when it comes to protecting your finances. This type of insurance covers the “gap” between how much you owe on your auto loan and how much the car is currently worth if your automobile gets totaled. Here’s what that might look like in real life…

Unfortunate Example

For example*, imagine that you purchased a new car and took out a loan for $31,000. Unfortunately, after 2 years, your car is totaled in an accident. Based on your loan, this is how the math would work:

  • Your loan balance: $19,800
  • Value of your car: $16,000
  • Your car insurance deductible: $1,000
  • Car insurance payment: $15,000

The gap between the $19,800 you owe and the $15,000 the insurance company pays you is $4,800!  You still owe that much money to your lender and you don’t even have the car anymore– yikes!

Who Needs It?

This type of coverage is a great choice if you think you’ll ever be “upside down” on your car loan or lease, meaning you’ll owe more money than the car will be worth. 

If you put little or no money down when financing your vehicle, or if you expect your car to depreciate quickly (ex: excess mileage), you are a great candidate for GAP insurance.

Pay Less for It

How can you save money on GAP insurance? Don’t buy it directly from a car dealer when you purchase or lease your car (because the price is often marked up). You could save several hundred dollars by getting GAP insurance directly through your auto insurance company instead. As a bonus, many insurance companies offer monthly payments for this type of insurance instead of the one hefty upfront fee you’d likely pay at a dealership. Also, many dealers charge a flat rate of several hundred dollars up front for a GAP policy, but your insurance company will likely offer the option of monthly payments for comparable coverage.

Our members can save money on insurance with special discounts just for credit union members here!

*These numbers are used as an example only and are hypothetical. Contact us directly for current rate information:  visit or call 800-356-0067.

The insurance offered is not a deposit of the Credit Union, is not protected by NCUA or any other type of deposit insurance, is not an obligation of or guaranteed by the Credit Union and may be subject to risk.