Consumer Protection

Gap Insurance

Guaranteed Asset Protection (GAP) may be offered to consumers who finance the purchase of their vehicle. It is a waiver or addendum to the finance contract. GAP is designed to cover the difference (or “gap”) between what your insurance carrier will pay (what it’s currently worth) and what you actually owe on the vehicle if it is stolen or if you have an accident and the vehicle is a total loss. GAP is in addition to any payout you receive from comprehensive or collision coverage through your auto insurance if your car is totaled or stolen.


  • GAP is optional. GAP may not be necessary if you make a substantial down-payment or pay cash for the full price of the automobile. Be cautious if the dealership or financing institution tells you that you have to carry GAP to qualify for an automobile loan.
  • You may want to consider GAP for a new or used automobile if you plan to:
    • Make less than a 20% down payment, including the value of your trade-in;
    • Have a repayment period of 60 months or longer;
    • Lease a vehicle (in which case, GAP is usually required);
    • Drive a lot of miles per year, which reduces a car’s value more quickly; or
    • Purchase a vehicle that depreciates faster than the average.
  • GAP must be itemized and listed separately on the finance contract, and it should never be included in the selling price of the vehicle. As mentioned earlier, GAP is a waiver or addendum to the finance contract.
    • If you choose not to take GAP, make sure it has not been added to your sales contract before you sign.
    • If you choose to buy GAP, be sure to ask that the price for GAP is listed separately on the finance contract and not bundled into the total cost of the vehicle’s financing.
  • GAP, like most additional products, does not have to be purchased at the time you buy the vehicle but may be purchased at a later date. Be cautious of high-pressure sales tactics demanding that you make an immediate decision.
  • The dealership or financing institution may offer you GAP, but they are not the only place you can buy it. You should check with your insurance agent about the insurance products they offer before purchasing a vehicle. Stand-alone GAP can often be purchased from some insurance companies as an addendum to car insurance policies, or from on-line companies which sell only GAP. Some insurance companies offer an alternative to GAP called a “loan/lease payoff” which instead of paying your debt balance will pay a set percentage of your car’s value.
  • Be sure you understand what is covered and not covered before you purchase GAP. To become familiar with automobile insurance terms and coverage, click here for a booklet on auto insurance published by the Arkansas Insurance Department.