Gap Insurance in Canada
When you are looking to trade in your old vehicle and upgrade to a new one or purchasing a new vehicle on finance, the dealership may ask you if you want GAP protection. In Canada, a lot of vehicle owner’s aren’t sure if they have the coverage or if it’s worth adding.
What Is Gap Insurance?
Gap Insurance also known as guaranteed auto protection or guaranteed asset protection, is additional automobile coverage that protects you in the event of your vehicle being totaled or stolen. It will substitute the actual cash value between your vehicle and how much you owe.
It also helps you pay off your auto loan if you owe more than your vehicle’s actual cash value in the marketplace.
All dealerships and lenders in Canada offer it as a one time premium. It can be rolled into your loan so you don’t pay out of pocket.
Why Do People Need Gap Insurance In Canada?
There are a number of factors when drivers should consider purchasing it:
What Is The Purpose Of Gap Insurance?
It provides you with financial protection against loss in the case your vehicle is written off after an accident. The amount of compensation provided by your insurer may not cover the cost to pay off your loan. Gap Insurance ensures you don’t pay for it out of pocket.
Why Should You Buy Gap Insurance?
Not all drivers need it. Your need for it comes down to the details of your financing and risk tolerance. Here are some reasons to buy it :
How Does Gap Insurance Work?
Let’s say your insurer determines if your vehicle is worth $20000 and you still owe $25000. If your vehicle is a total loss, they compensate you $20000 to cover the loss. This means $5000 is still required to pay off your loan. Without gap insurance, you would be required to pay the difference.
What Does Gap Protection Exclude?
Exclusions will vary depending on your agreement and limits. Here are 4 common exclusions to keep in mind: