Gap Insurance — What is it, and why might it save you from a financial hardship?

by Sean Wyandt

Gap Insurance – Gap insurance covers the gap between what you owe on your vehicle loan and its current market value.

If you’re in an accident and your insurance company decides your vehicle is totaled (also called “total loss”), your collision coverage will only cover the vehicle for market value. In many cases when you drive that vehicle off the lot, the market value is lower then what you still owe on that vehicle. In this instance you would want gap coverage to protect you if something were to happen to you during that period of time. Gap coverage, in most cases, can either be purchased at the dealership or through your insurance agent.


  • Loan balance on a 2015 vehicle: $20,000
  • Actual cash value: $18,000
  • Payoff without gap coverage: $18,000 (minus your deductible)
  • Amount still owed: $2,000
  • Payoff with gap coverage: $20,000
  • Amount still owed: $0

In many cases obtaining Gap coverage through your insurance agent will come at a lower cost, but in some cases you may not be given that option. Some car dealers require you to obtain the coverage through them, and some insurance carriers may not offer the coverage if the vehicle is not a new purchase. Always check with your agent and car dealer before making your purchase.

Give Sean a call at 610-406-5827 or email sean@ Rothenberger Insurance Services is located at 436 Penn Avenue, West Reading, Pennsylvania 19611. Sean provides insurances services to individuals and businesses in Kutztown, Fleetwood, Wyomissing, Sinking Spring and surrounding areas. Give him a call today for your Gap insurance.



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