Understanding G.A.P. Insurance (Guaranteed Asset Protection)
G.A.P. stands for Guaranteed Asset Protection, an optional insurance policy designed to cover the “gap” between the amount you owe on your vehicle loan or lease and the actual cash value (ACV) of your vehicle in the event of a total loss due to theft or an accident. When your car is totaled and your insurance payout doesn’t fully cover the remaining loan or lease balance, G.A.P. insurance steps in to pay the difference, protecting you from significant financial hardship.
Purpose of G.A.P. Insurance
The primary purpose of G.A.P. insurance is to shield consumers from financial loss after a total vehicle loss. Without G.A.P. coverage, a borrower could still owe thousands of dollars to the lender or leasing company, even after the insurance payout.
Is G.A.P. Required by Most Lenders?
G.A.P. insurance is not required by most lenders. However, it’s often recommended for consumers financing a large portion of a vehicle or signing longer loan terms. Some dealerships may misrepresent G.A.P. insurance as a mandatory requirement to obtain financing — this is false and deceptive. Such practices may constitute auto fraud, and consumers should be cautious when signing dealership contracts.
Insurance Coverage and G.A.P. Claims
To qualify for a G.A.P. claim, consumers must carry comprehensive and collision coverage on their auto insurance policy. G.A.P. insurance is intended to supplement your existing coverage — without these protections, your claim may be denied.
Can You Cancel a G.A.P. Policy?
Yes. Most G.A.P. contracts include a cancellation policy. Consumers should review their G.A.P. agreements for cancellation instructions and potential refunds. Always ensure that you receive written proof of cancellation and confirmation of any refund due.
When a Dealership Fails to Pay the G.A.P. Premium
If a dealership collects payment for a G.A.P. policy but fails to remit the premium to the insurer, the consumer is left unprotected in the event of a total loss. This may occur due to dealer negligence or intentional misconduct — also known as G.A.P. premium fraud. In such cases, the dealership may be legally responsible for the financial damages that result.
What to Do If Your Dealership Doesn’t Pay Your G.A.P. Premium
If your dealership fails to fund your G.A.P. policy after collecting payment, you can take legal action. The dealership may be liable for the difference between your loan balance and the actual cash value of the vehicle. Consumers may also recover attorney’s fees when pursuing a claim under state consumer protection laws.
If you suspect auto fraud or G.A.P. premium fraud, contact an experienced Auto Fraud Attorney or Lemon Law Attorney to protect your rights and recover your losses.
Protect Yourself Against Auto Fraud
Always verify that your G.A.P. coverage was properly funded. Request a copy of your G.A.P. contract, including the policy number and payment confirmation. If the dealership refuses to provide this information or if your policy cannot be verified, consult with a qualified Auto Fraud Attorney immediately.