No, gap insurance does not pay for repairs even if the repairs exceed the vehicle’s actual cash value. Gap insurance only pays for the difference between what your insurance will pay for a totaled vehicle and how much you still owe on the loan or lease.
What Gap Insurance Covers When a Car Is Totaled
Your remaining car loan balance
Any amount owed on a vehicle lease
Negative equity from a previous vehicle that was rolled into a current loan
Repairs due to engine failure, transmission problems, or any sort of mechanical breakdown are not covered by gap insurance, nor by standard car insurance policies. Those types of repairs are covered by mechanical breakdown insurance or car repair insurance, though.
Gap insurance does not cover routine maintenance, a damaged car that is not declared a total loss, or missed car payments. Gap insurance covers the difference between a car’s actual cash value and the balance left on the loan or lease if the car is totaled or stolen. This coverage is not required by law, but some lenders and lessors require it for a financed car.… read full answer
What Gap Insurance Does Not Cover
The total cost of a brand-new replacement vehicle
Routine repairs or replacement parts
Damage to a rental car after an accident
The cost of using a rental car while your vehicle is being repaired
Any balance from a previous loan that was applied to your current loan
The reduced value of your car if it is damaged in an accident but not totaled
Missed car payments as a result of financial difficulty, injury, disability, or death
Extended warranties that were part of or added to the original loan or lease balance
Damage to someone else’s property, injuries, or lost wages as a result of an accident
The difference between a car’s cash value and the balance of a loan or lease after engine failure
Gap insurance may not pay for your comprehensive or collision coverage deductibles, either, but each insurance company has its own rules in this regard.
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