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  • The Gerring Law Firm

Buy Gap Insurance!

Updated: Sep 19, 2019

The insurance company will pay the market value of your car if it is declared a total loss. What happens if the amount you owe on your car note is more than the value of your car? Enter Gap Insurance. This policy is an add-on to your car payment that binds the insurance company to pay for the difference between what is owed on your note and the market value of your car. I highly recommend purchasing gap insurance to protect yourself from the whims of the market.



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If you buy a new car, purchase GAP insurance. It is usually only a small add on to your car payment. It can save you thousands of dollars down the road.




If your car is totaled, the insurance company will pay for the full value of your car. This amount is not necessarily the same as the amount that you may owe on the car. If you owe more than your car is worth, you may still be responsible for the amount remaining on your note after the holder of the note is paid in full.


Insurance companies spend a lot of money to make sure they have current market data. They will evaluate the value of your car using their algorithms, not Kelly Blue Book. In theory, it sounds simple to calculate if you owe more than your car is worth. The reality of the used car market and speed of depreciation is a much different story. You may not always be able to tell if you owe more on your car than it is worth. With used cars and SUVs this is especially tricky.


I have had many clients with used cars that are only a few years old shocked to find out that their car had depreciated to much less than how much their car note was for. Don’t get stuck paying on a car note for a totaled car can't drive! Buy Gap Insurance! The only way to make sure that you are protected is to buy GAP insurance. This insurance covers the difference between what the totaled value of your car and the amount you owe on the car loan.

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