Gap Insurance
Coverage that pays the difference between what you owe on your car loan and the vehicle's actual cash value if the car is totaled or stolen. New cars depreciate quickly, and without gap insurance you could owe thousands on a car you no longer have.
Real-World Example
Tyler owed $22,000 on his car loan, but his car was only worth $17,000 when it was totaled. Gap insurance covered the $5,000 difference.
Related Terms
Disclaimer: This glossary entry is for informational purposes only and does not constitute financial or insurance advice. Consult with a licensed insurance professional for personalized guidance. GuardianChoices may earn affiliate commissions from links on this site — see our advertiser disclosure.
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