Vehicles do get totaled and they do get stolen. Most people assume that if that happens to them, their auto insurance will cover their loss. That isn’t necessarily the case, and especially not if the vehicle is financed.

Most financed vehicles have a larger loan balance than the value of the car or truck, especially during the first few years. Consider this. If you purchased a vehicle for $25,000 and financed the full amount, the moment you drive it off the lot it might have a book value of $20,000.

If the vehicle is totaled or stolen, the insurance company will normally pay up to the book value. That’s after the deductible, of course. The insurance settlement may be far short of the amount that is owed, leaving a person with no car and a big loan balance due.

GAP insurance covers the shortfall by:

• Paying the difference between the insurance settlement and the loan balance;
• Paying the deductible.

The cost of GAP insurance is a one-time premium of $195 for any car or light truck.

GAP insurance is also available for boats, travel trailers, motor homes and certain other items at a slight higher cost.

Call for details.