# Question on GAP insurance and car accidents
**URL:** https://boards.straightdope.com/t/question-on-gap-insurance-and-car-accidents/541538
**Category:** Factual Questions
**Created:** [June 1, 2010, 6:51pm UTC](https://boards.straightdope.com/t/question-on-gap-insurance-and-car-accidents/541538 "2010-06-01T18:51:57Z")
**Posts on this page:** 11
**Page:** 1
### Author:  [@Anaamika](https://boards.straightdope.com/u/Anaamika)
#### Post date: [June 1, 2010, 6:51pm UTC](https://boards.straightdope.com/t/question-on-gap-insurance-and-car-accidents/541538/1 "2010-06-01T18:51:57Z")
A friend of mine was in a car accident over the weekend. He rear-ended an eighteen wheeler in the early morning (it never stopped, if that matters. His was the only vehicle left on site), and believes he totaled his car based on the extensive body damage, leaking fluids, and air bag deployment.
He’s called his insurance agency to file a claim, and just talked to his adjuster for the first time about an hour ago. His adjuster explained to him that his GAP insurance coverage only covers an extra twenty-five percent, e.g. $1,250.00 on a car valued at $5,000.00, on a lost or totaled car but his understanding is that GAP insurance covers the full difference between the value of the car and any remaining debts.
Does anyone have any experience with this, or any advice they could offer?
---
### Author:  [@Inigo\_Montoya](https://boards.straightdope.com/u/Inigo_Montoya)
#### Post date: [June 1, 2010, 7:02pm UTC](https://boards.straightdope.com/t/question-on-gap-insurance-and-car-accidents/541538/2 "2010-06-01T19:02:45Z")
Claims Guy. Generally, GAP covers the difference between the loan amount and the ACV (settlement amount) of the car at the time of the accident. $20,000 loan balance on a $15,000 car? GAP pays the $5,000 difference to the lender.
Also, it is up to the bank to file the claim for the unpaid balance with the GAP insurer. Friend may be asked to obtain & provide supporting documentation to the bank to help them support their claim, but that’s it. Among that paperwork will be the settlement breakdown from the property insurance company.
---
### Author:  [@Anaamika](https://boards.straightdope.com/u/Anaamika)
#### Post date: [June 1, 2010, 7:49pm UTC](https://boards.straightdope.com/t/question-on-gap-insurance-and-car-accidents/541538/3 "2010-06-01T19:49:42Z")
Thank you, I’ll pass it on.
---
### Author:  [@Anaamika](https://boards.straightdope.com/u/Anaamika)
#### Post date: [June 1, 2010, 8:15pm UTC](https://boards.straightdope.com/t/question-on-gap-insurance-and-car-accidents/541538/4 "2010-06-01T20:15:16Z")
Ok, I passed it on. (He can’t access the Dope through work.) Here is his follow-up question:
" I owe $7,000.00, give or take, on a 2006 car whose loan was for roughly $19,000.00? If my car is only worth $1,000.00 (lowball figure), does that mean the GAP insurer pays the remaining $6,000.00? That’s what I take from that, but my adjuster says they would only pay $1,250.00, which is what the car is worth, plus twenty-five percent."
---
### Author:  [@Baracus](https://boards.straightdope.com/u/Baracus)
#### Post date: [June 1, 2010, 8:22pm UTC](https://boards.straightdope.com/t/question-on-gap-insurance-and-car-accidents/541538/5 "2010-06-01T20:22:18Z")
From what I have read, it is not unheard of for gap insurance to be limited to some percentage beyond the ACV of the car as the adjuster told your friend. My advice is for your friend to dig out the paperwork that he has hopefully saved from when he purchased the car and see exactly what the policy HE purchased covers.
ETA: Your last post popped up while I was typing, but the advice remains the same. He needs to find his policy and see what he actually signed up for. His adjuster might be blowing smoke or he might be correct.
---
### Author:  [@Omar\_Little](https://boards.straightdope.com/u/Omar_Little)
#### Post date: [June 1, 2010, 8:47pm UTC](https://boards.straightdope.com/t/question-on-gap-insurance-and-car-accidents/541538/6 "2010-06-01T20:47:32Z")
What kind of '06 car that he paid +$19k for is only worth $1k four years later? Did he put over 200k miles on it?
---
### Author:  [@Inigo\_Montoya](https://boards.straightdope.com/u/Inigo_Montoya)
#### Post date: [June 1, 2010, 8:56pm UTC](https://boards.straightdope.com/t/question-on-gap-insurance-and-car-accidents/541538/7 "2010-06-01T20:56:17Z")
The ONLY purpose of GAP insurance is to protect the loan from losses caused by a vehicle’s natural depreciation. I expect the %age being talked about has to do with the amount the GAP policy can be underwritten for when the loan is first made. For example:
- I still owe $15,000 on a car I’ve had for a couple years.
- I trade the car in so I can purchase a new $35,000 car.
- The $15,000 I owe on the old car gets rolled into a new loan for $50,000–pays off the old car and finances the new car.
- GAP company calls BS, they will only underwrite a maximum of 125% of the cost of the new car: $35,000 \* 1.25 = $43,750
In 7 years of dealing with total losses and GAP insurance, the only time I’ve had a customer have problems with their GAP is when they’ve overfinanced a car.
---
### Author:  [@Baracus](https://boards.straightdope.com/u/Baracus)
#### Post date: [June 1, 2010, 9:36pm UTC](https://boards.straightdope.com/t/question-on-gap-insurance-and-car-accidents/541538/8 "2010-06-01T21:36:09Z")
> [@Inigo\_Montoya](#):
>
> The ONLY purpose of GAP insurance is to protect the loan from losses caused by a vehicle’s natural depreciation. I expect the %age being talked about has to do with the amount the GAP policy can be underwritten for when the loan is first made.
That is probably true in most cases but Progressive does offer [Loan/Lease Payoff Coverage](http://auto.progressive.com/progressive-car-insurance/loan-lease-payoff-coverage.aspx) that most people would probably just call Gap Insurance and it only pays up to 25% of the ACV.
---
### Author:  [@Anaamika](https://boards.straightdope.com/u/Anaamika)
#### Post date: [June 2, 2010, 12:37pm UTC](https://boards.straightdope.com/t/question-on-gap-insurance-and-car-accidents/541538/9 "2010-06-02T12:37:21Z")
Thank you, I am passing on all of these responses. I swear, it’s not me, my car is intact, I just drove it to work! But I really appreciate your answers. He just can’t access any links from work at all.
---
### Author:  [@crazyjoe](https://boards.straightdope.com/u/crazyjoe)
#### Post date: [June 2, 2010, 1:44pm UTC](https://boards.straightdope.com/t/question-on-gap-insurance-and-car-accidents/541538/10 "2010-06-02T13:44:04Z")
Well, since you seem to know him, what kind of car does he drive? I paid 3500 for a 2004 vehicle just recently, probably with a new cost of around 19 - 20K, and it’s certainly worth more than 1K now. I can’t imagine an 06 vehicle being worth only 1K today. Even with 200K miles on it, 1K is what you pay for a car that starts up and is driveable, so if it’s above that level, it is worth more.
---
### Author:  [@Anaamika](https://boards.straightdope.com/u/Anaamika)
#### Post date: [June 2, 2010, 7:05pm UTC](https://boards.straightdope.com/t/question-on-gap-insurance-and-car-accidents/541538/11 "2010-06-02T19:05:59Z")
It is a
2006 Hyundai Elantra with roughly 60,000 miles on it and some pre-existing body damage.
And the $1000 was only a lowball figure…not accurate.