It’s called the "gap." It’s the difference between the Amount Owed on your Retail Installment Sales Contract/Lease Agreement and the Actual Cash Value of your vehicle at the time of a Total Loss.
The Amount Owed does not include missed payments, payment extensions, deferred payments, accrued interest, late fees, disposition fees, penalty fees, early termination fees or finance charges incurred after the date of loss. Also, if the insurance company valuation used to calculate the Actual Cash Value is less than 90% of the NADA value of your vehicle, the NADA value will be used in determining the "gap" amount waived (which means a smaller amount may be waived).
If your car is determined to be a Total Loss, the "gap" between the Amount Owed and the Actual Cash Value of your vehicle could translate into thousands of dollars that you would still owe after the settlement from the auto insurance company. The Total Loss Protection Plan excludes total loss claims denied by your automobile insurance company. This is an optional waiver product and not a product of insurance. It is not required for you to obtain financing for the purchase or lease of a vehicle.
GAP* does not waive your insurance deductible. GAP Plus (GPP)* waives your insurance deductible up to a maximum of $1,000. It is included in the calculation to determine the amount waived.
Gap Plus (GPP) waives your insurance deductible up to a maximum of $1,000. It is included in the calculation to determine the amount waived.
Claims must be submitted within 90 days of auto insurance company settlement or date of loss if no insurance exists. Upon refinancing, the contract will terminate. A refund will be made within 90 days only upon written request by the customer. This information is intended to provide only an outline of the terms and conditions of the Total Loss Protection Plan described in this website and should not be relied upon at the time of purchase or lease of your vehicle. For exact terms and conditions, please review the Total Loss Protection contract itself. Ask your salesperson or Finance Manager for the Total Loss Protection/Gap option you prefer.