In the event of a total loss (including theft) of a leased vehicle, a GAP cover closes the financial gap between the replacement value paid by the comprehensive insurance and the residual lease value that you still have to pay for the leased vehicle.
This additional protection is also called differential coverage or different comprehensive insurance.
If you finance a car, the leasing rate will continue to run after a total loss or theft. While the comprehensive insurance pays the replacement value, a difference to the residual lease value remains open. This gap (English: “gap”) closes the GAP coverage for you. The abbreviation stands for Guaranteed Asset Protection.
What damages are covered by the CAP?
The GAP coverage kicks in whenever you have to cancel a leasing contract prematurely due to total damage or theft.
If your car is stolen, there is a total loss of value. A total loss is when your car is so badly damaged after an accident that the repair costs are more expensive than the replacement value. The replacement value is the price you would pay in the used car market for an equivalent car.
In both cases, the GAP cover covers the difference between the replacement value and the lease payment. Without this additional insurance, you will have to pay the costs yourself.
What is the purpose of gap insurance?
Is gap insurance a good idea?
How does gap insurance work example?
Do you get any money back from gap insurance?