# WHAT IS GAP INSURANCE?

**URL:** <https://howtodiscuss.com/t/what-is-gap-insurance/16978>\
**Category:** Insurance\
**Created:** [September 19, 2020, 3:41pm UTC](https://howtodiscuss.com/t/what-is-gap-insurance/16978 "2020-09-19T15:41:59Z")\
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**Author:** ![maryamsyed02](https://howtodiscuss.com/user_avatar/howtodiscuss.com/maryamsyed02/32/3388_2.png) [@maryamsyed02](https://howtodiscuss.com/u/maryamsyed02)\
**Post date:** [September 19, 2020, 10:00pm UTC](https://howtodiscuss.com/t/what-is-gap-insurance/16978/2 "2020-09-19T22:00:24Z")

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**GAP INSURANCE**

**What Is GAP Insurance?**

To study more about [gap insurance](https://howtodiscuss.com/t/what-is-gap-insurance/16978) we need to know what gap insurance is. GAP is basically an abbreviation for Guaranteed Asset Protection and it was established in the North American [financial](https://howtodiscuss.com/t/financial/12037) industry. Gap insurance is basically used on new and used vehicles like cars and heavy trucks, also it is required by companies and financing [companies](https://howtodiscuss.com/t/company/6903).

**WAYS TO GET GAP COVERAGE:**

There are precisely two types of ways of getting gap coverage.

-The first type is way easier as an [insurance policy](https://howtodiscuss.com/t/insurance-policy/16045) sold by a broker. It is regulated by the insurance industry, the coverage here as well as in the second type is the same and sold as a soft product through car dealership.

- The second type is a waiver [agreement](https://howtodiscuss.com/t/agreement/6690) sold by a Finance & Insurance Manager. This type is unregulated. [Coverage](https://howtodiscuss.com/t/full-coverage/15574) is usually financed along with the lease/loan. Claims are subject to a total loss. The total loss is usually determined by the primary insurance company’s [third-party.](https://howtodiscuss.com/t/third-party-insurance/7843)

**COST OF GAP INSURANCE:**

Just like normal insurance varies with states and different areas the same way gap insurance also varies with states. Some [exclusions](https://howtodiscuss.com/t/exclusion/11141) include a maximum loss limit of $50,000 while others require a loan term of less than eighty four months. GAP is an optional [purchase](https://howtodiscuss.com/t/purchase/13913), however, many states in the US require that a car dealership offer GAP at the point of purchase. Although GAP is optional, some finance companies require GAP as a condition to obtaining a [loan](https://howtodiscuss.com/t/loan/11885).

**UK GAP INSURANCE:**

Walking to the past, In September 2015, the FCA changed the way that Gap Insurance are sold by car dealers in the UK.

Claims [ratios](https://howtodiscuss.com/t/current-ratio/12652) for GAP insurance were just 10% between 2008 and 2012, meaning that just £10.00 was paid out for every £100.00 paid in [premiums](https://howtodiscuss.com/t/insurance-premium/11844). The poor value for money being given to consumers prompted the FCA to require the following rules:

They have to ensure dealers make [consumers](https://howtodiscuss.com/t/consumer-goods/9977) aware of the fact that other [suppliers](https://howtodiscuss.com/t/supplier/6842) exist.

the [transaction](https://howtodiscuss.com/t/transaction/6637) may delay by 4 [business days](https://howtodiscuss.com/t/business-day/9034) only.

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