A simple explanation for GAP coverage is the following: the auto loan on your vehicle is still owed, at $30,000, and you're involved in a total loss, at-fault accident. The money your insurance company will pay is the value of your vehicle at the time of the loss. If your vehicle is a few years old and worth $20,000, purchasing GAP coverage before the accident would cover $10,000 and your insurance company would cover the $20,000 (value of the vehicle.) Not having GAP coverage would leave you with a $10,000 bill to pay yourself. 😫
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