What is GPP Insurance?
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What is GPP Insurance?


GPP when in reference to a car typically means Guaranteed Protection Plan. GPP is mostly known as coverage offered by auto alarm companies and it will refund your comprehensive deductible up to named limit (usually $2,500) if your car is stolen with while the alarm is installed and armed in your vehicle.

So GPP pays your car insurance deductible if your car is stolen. Basically the alarm company is saying their system should work and prevent a thief from taking your vehicle but if it does not they will pay your comprehensive deductible.

It could be however that someone is really referencing Gap insurance which is much more common. There are some that may say GPP when speaking about Guaranteed Auto Protection Plans though most call this GAP insurance.

GAP protection covers the difference between what your primary auto insurance company will pay if your vehicle is totaled or stolen and not recovered and the amount you owe to the bank, sales finance company, or lessor. Your auto must be a total loss or stolen and not recovered for the GAP program to cover the "GAP" between the balance owed on the auto and what your auto insurance pays for the loss.

When you purchase your policy online with CarInsurance.com, most of our carriers offer this coverage. It is labeled Loan/Lease Gap coverage. You can purchase it easily with your policy for very little premium. If you don't have a car insurance policy, CarInsurance.com offers GAP Insurance when you purchase an auto insurance policy through some of our online auto insurance partners.

This is how a "GAP" occurs (using fictitious numbers):

  • You choose a car that costs $25,000 and you drive it off the lot.
  • After paying the down payment you owe $24,000 in car payments over 5 years (0% interest loan = $400 car payments).
  • You purchase physical damage insurance (comprehensive and collision) with a $500 deductible to protect you against damages and loss.
  • You have an accident while you are still upside down on your loan or lease ("Upside down" means owing more on a car than it's worth) and your vehicle is totaled.
  • The insurance company determines that the actual cash value of the car is only $22,000, but at the time of the loss you still owe $23,500.
  • GAP insurance should pay the difference plus your deductible totaling $2000. (Not all GAP policies pay the deductible)

Here are the line items:

  • Loan Payoff at the time of accident: $23,500
  • Vehicles actual value at the time of accident: $22,000
  • Your deductible: $500
  • Physical Damage Insurance Company pays: $21,500 ($22,000 minus $500 deductible)
  • GAP insurance pays the difference between what is owed and what the Physical Damage Insurance Company pays (plus your deductible): $2000

Typically a new car is worth approximately 30 percent less in 3 months than the day it was purchased! In our example above, if you owned the car for 3 days, had physical damage coverage and the car was totaled, you could owe 20% to 30% of the $24,000 ($4,800 to $7,200 out of your pocket) even though you purchased "full coverage."

Car owners often assume that if their car is totaled, it will be replaced at the amount they paid, or at least the amount they owe. This is not so. Many car insurance companies offer a GAP option (Loan/Lease Gap Insurance) as an optional coverage that is available with physical damage coverage. Typically, a stand-alone GAP policy is sold by a car dealer. CarInsurance.com doesn't currently offer a stand-alone GAP Insurance product. If you carrier doesn't offer it, you should consider comparing quotes and switching car insurance companies.


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