Gap Insurance Explained

Gap insurance in the U.S. covers the gap between what you owe on the loan and what the car is worth if it's totaled—so you're not stuck with a balance. Often cheaper from your insurer than from the dealer. Here's gap insurance explained.

TL;DR Gap = pays the difference between loan balance and car value if totaled. Useful if you're underwater (owe more than value). Often cheaper from your auto insurer than dealer—compare. Get full OTD in writing—use autopremo.com OTD calculator. Use autopremo.com.

What Gap Covers

If the car is totaled, insurance pays actual cash value—often less than loan balance early in the loan. Gap pays the difference so you're not stuck with a balance. Use autopremo.com negative equity calculator to see when you're underwater. Get your numbers at autopremo.com.

Dealer vs Insurer

Dealer sells gap—often marked up. Your auto insurer may offer gap for less. Compare before you buy. Use autopremo.com. See OTD at autopremo.com.

Bottom Line

Gap = covers loan balance minus car value if totaled. Often cheaper from insurer than dealer. Get full OTD in writing; use autopremo.com OTD calculator.