Any carrier that offers Loan/Lease GAP insurance will require physical damage to be purchased. Separate GAP insurance providers' guidelines may differ but the GAP insurers we are aware of require you to have full coverage, thus physical damage coverages of collision and comprehensive, on your vehicle. Normally in order to protect their investment your lien holder will also require you to have collision and comprehensive on the vehicle until it is fully paid off.

GAP insurance normally pays the balance due on your loan or lease after your car has been determined to be a total loss. This coverages comes into effect after your totaled vehicle has had its actual cash value (ACV) paid out by your primary insurer.

Once the ACV has been paid to the lien holder the difference still owed on the loan or lease is what GAP typically pays. If you do not have primary insurance of collision and comprehensive to pay out the ACV on the vehicle, then GAP would be unable to used.

When a carrier offers GAP insurance it typically has this set as the first eligibility guideline:

Eligibility only extends to a policy providing comprehensive and collision coverage. Coverage applies only in the event of a premature termination of the loan or lease due to a total loss covered under comprehensive or collision. Coverage does not apply to overdue payments, penalty charges assessed for excessive mileage or excessive wear and tear, etc.

So for GAP insurance your state liability insurance is not normally enough, you will need to purchase full coverage. For a rate quote on GAP insurance or collision and comprehensive coverages, start here with us.