How Does GAP Insurance Work After a Car is Totaled?

Tiny car with insurance documents

Most Mesa drivers don’t want to think about what will happen if they’re ever involved in a major collision, but an understanding of all the insurance options is crucial whether you’re looking for a new vehicle or a pre-owned model. GAP insurance is one option you might have heard about, so how does GAP insurance work after a car is totaled?

Well, if your vehicle is ever totaled you’ll get a payout from your insurance company based on its current value — but for people with auto loans, that often means receiving less than the vehicle is worth. GAP insurance steps in to cover the difference between auto loan and original payout. Need to find out more? Simply read on.

What Counts as a Car Being Totaled?

People often use the words “totaled” and “wrecked” interchangeably, but they have slightly different meanings.

If your vehicle is totaled around Surprise or Glendale, it means damage is so severe that the cost of repairs would exceed most or all the vehicle’s value. That said, it’s worth talking to your insurance company to find out exactly what they consider a total loss.

What is Gap Insurance?

Okay, so how does gap insurance work on a total loss?

The “gap” refers to the difference between initial loan and the vehicle’s current value. In the event of an accident, the gap insurance will cover that difference to ensure you don’t end up paying off the remainder of the loan out-of-pocket.

For example, let’s say you took out a $20,000 loan to pay for a vehicle, which was then valued at $18,000 when totaled. You’d only receive $18,000 from your primary insurance policy, and you’d be liable for the remaining $2,000 yourself. With GAP insurance, that $2,000 would also be covered.

Find Out More About Insuring Your Vehicle by Contacting Us Today

Whether you’re asking, “how does gap insurance work if your car is totaled?” or simply need more car buying tips, the team at your local Cactus Jack dealer will be happy to help. Simply get in touch today for any further advice or assistance.

 

More from Cactus Jack's Auto

  • The Importance of Regular Oil Changes

    Changing your car’s oil at regular intervals isn’t just a good idea — it’s a vital part of keeping your car’s engine running properly. The purpose of engine oil is to keep the internal parts of your car’s engine lubricated and cool. Without frequent oil changes, dirt and sludge can build up in the engine, and old,…

  • What is Direct and Indirect Finance?

    Between choosing a trim level and setting a budget, there’s a lot to consider when buying a new-to-you car. One of the most important decisions you’ll make is the financing method, so you’ll want to be familiar with the key difference between direct vs. indirect finance before you get started. So, what is direct and…

  • How to Calculate Gas Mileage

    All new vehicles are rated by the Environmental Protection Agency, commonly known as the EPA. As you may have noticed, many gas mileage ratings are accompanied by a disclaimer stating that “actual mileage may vary.” If you want to be sure that you’re getting the best possible mileage from your vehicle, you can learn…

Saved Vehicles

SAVED VEHICLES

You don't have any saved vehicles!

Look for this link on your favorites:

Save

Once you've saved some vehicles, you can view them here at any time.

Contact Us

(602) 443-5225

Call Now

2440 W Camelback • Phoenix, AZ 85015

Get Directions

Today's Hours:

Open Today! Sales: 9am-7pm

Cactus Jack's Auto 33.5101018, -112.1115231.