Guaranteed Asset Protection (GAP) is optional low-cost coverage that supplements standard auto insurance to protect you against financial loss in the event your vehicle is stolen or declared a total insured loss. You might think that your auto insurance provides all the protection that you may need if your vehicle is totaled or stolen and not recovered. However, you could be in for an unpleasant surprise.

While auto insurance covers the replacement value of the vehicle, you may still be liable for the difference between the insurance settlement and their remaining loan balance — which could potentially amount to thousands of dollars. With vehicle depreciation, loan terms extending, and the cost of repairs rising, chances that a “gap” will occur between the remaining loan balance and insurance settlement is greater than ever. When you purchase GAP from Chartway, you can worry less about how you’ll pay off your loan and replace your vehicle if it’s totaled.

Newly purchased vehicles depreciate the second they’re driven off the dealer’s lot. When a vehicle is totaled in an accident or stolen and not recovered, you could owe more than the vehicle is worth. GAP is designed to cancel the difference between the insurance settlement and the loan balance. Our choice-driven GAP and GAP with deductible assistance offer more features and more control than ever before.

How does GAP work?

GAP covers the “gap” between what your vehicle is worth and what you are actually responsible for paying regarding your vehicle loan after a collision. It guarantees that your car loan does not become a financial burden in the event it is totaled or stolen.

For example, let’s say you buy a brand-new car for $35,000. We know that the moment you drive it off the lot, the value drops. Then, it may only be worth $27,000. If you are in an accident, your auto insurance will pay the replacement cost of the vehicle, or $27,000. The policy specifies that they must fulfill the obligation of replacement at current market value. It has nothing to do with the loan value of your vehicle. You are still $8,000 short. GAP coverage would potentially make up the difference. Keep in mind that, in the above scenario, the car insurance reimbursement goes to your auto lender to pay off a car that's no longer drivable. In addition, the cost of gap insurance will vary depending on various factors, including the value of your car. You can calculate your GAP coverage by clicking here.

One of the advantages of GAP is that it can help protect you from building “negative equity,” or debt from an old car loan carried into a new one. Without GAP, if your car is totaled and your insurance payout does not cover the full balance on your car loan, you may have to roll the remaining balance into your next car loan. Not only would this mean having more debt, it would put you at greater risk of being underwater in your new car loan. But if your car is totaled and you have GAP coverage, then your old car loan cannot follow you into your next one.

Can I get GAP coverage after I buy a car?

You can still purchase GAP after you buy a car. You might consider adding GAP in any of these circumstances:

  • You are purchasing or leasing a new or slightly used vehicle.
  • You are buying a vehicle of significant value.
  • You are financing a new or used vehicle without a large down payment, creating a “gap” between your vehicle’s actual value and your loan amount.
  • You do not have significant cash savings that would allow you to cover the difference between the amount you owe on your loan and the actual cash value if your car is stolen or totaled.

GAP features and coverage:

  • GAP pays the difference between the primary auto insurance carrier's settlement and the protected balance.
  • The protected balance is the payoff amount that is directly related to the purchase of the vehicle or the amount borrowed that is secured by the vehicle.
  • Claims are subject to coverage limits.
  • The GAP premium can be added to the total amount financed by the new loan.

Add GAP coverage to your Chartway loans and protect against the financial pressures that come from loss of life, disability, or involuntary unemployment. There's even loan protection for vehicle repairs and replacement. As a CUNA Mutual Group member, we are able to provide these affordable coverage options for you and your family. Contact us or visit your neighborhood branch and we'll be happy to answer your questions.

Learn more about GAP coverage on by clicking here.