When you drive off the lot in a new car, it’s hard not to feel excited. New (or new-to-you!) wheels often come with big plans—weekend trips, daily commutes, school drop-offs, and everything in between. But something many drivers don’t think about until it’s too late is what happens if that shiny car is suddenly totaled or stolen.
That’s where GAP insurance comes in.
What is GAP Insurance?
GAP stands for Guaranteed Asset Protection. It’s an optional insurance coverage that helps bridge the “gap” between:
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What your auto insurance will pay if your car is totaled or stolen, and
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What you still owe on your auto loan or lease
Because vehicles depreciate quickly—especially new cars—your loan balance can be higher than the actual cash value (ACV) of your car. Without GAP insurance, you could end up paying thousands out of pocket even though you no longer have the vehicle.
A Quick Example
Let’s say you financed a car for $35,000. A year later, it's unfortunately totaled in an accident.
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You still owe: $30,000
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Insurance pays the vehicle’s current value: $24,000
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You owe $6,000 out of pocket
…unless you have GAP insurance. With GAP coverage, that remaining balance could be covered.
When GAP Insurance Makes Sense
GAP insurance is especially worth considering if:
✅ You financed a new vehicle with a small down payment
✅ You have a long-term auto loan (60 months or more)
✅ You rolled negative equity from a previous vehicle into your current loan
✅ You lease your vehicle (many leases already include GAP coverage—check your contract!)
If you’re in one of these situations, the peace of mind GAP offers can be invaluable.
Where Can I Get GAP Coverage?
Many dealerships offer GAP at the time of purchase—but it’s often more expensive there. You can typically add GAP coverage through your auto insurance policy, too, and it may be more cost-effective.
If you're not sure whether your current policy includes it or whether you even need it, that’s what we’re here for.
Local Guidance, Real Protection
At Barber Insurance, we’re proud to support our Sonoma County community with honest, straightforward guidance. We know insurance can feel complicated—especially when you’re making big life purchases like a new car.
Have questions about GAP insurance or want us to review your auto policy?