Toyota Gap Insurance: Everything You Need To Know
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When looking into a new vehicle, auto insurance is a crucial part of the consideration. GAP varies across states in terms of kind and availability. In some states, GAP may not be offered on loan and leasing arrangements. At the time of purchase, it’s always smart to consult with the dealership and refer to your purchase or lease agreement. Some form of insurance is typically required at the time of purchase, but what are the benefits to additional Toyota GAP insurance?
When your car is totaled, GAP usually waives or covers the difference between the amount outstanding on your loan or lease contract and your vehicle insurance payout (minus certain fines and taxes). If GAP is purchased and declared individually on the finance or lease contract, it is available in most states to be applied immediately.
Although GAP insurance is an optional purchase, several states in the United States mandate that a vehicle dealership provide it as an option at the time of purchase. If your vehicle is totaled or stolen in the first few years of ownership, or at any time during a lease, a few hundred dollars in GAP insurance might save you thousands.
Ask your dealer about Toyota Financial Services’ GAP program while you’re planning to buy or lease, because it’s only available from your dealer at the time of purchase. Additionally, the cost of GAP can be included in your loan or lease contract and incorporated as a percentage of your monthly payments for your convenience which is still subject to credit approval).
Toyota’s GAP insurance program
Toyota’s GAP coverage is called “Guaranteed Auto Protection” and is a voluntary protection package that you can add, and can be canceled through the GAP agreement, certificate, or waiver. The coverage is offered through Toyota Financial Services (TFS) and will waive or reimburse the difference between the amount still owed on your loan or lease contract after your insurance settlement (assuming you have coverage) before taxes and fees. In most areas, GAP will cover your deductible on your full vehicle insurance.
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What are the pros of Toyota Gap Insurance?
- The deductible is covered up to $1,000
- A shortfall balance of up to $50,000 is paid
- Loan amounts up to 150 percent of MSRP (new)/NADA retail are covered (used)
- In the case of a total loss, the obligation of excessive depreciation or negative equity is eliminated
- Customers can get a prorated refund if they trade or sell their car, allowing them to start with a new vehicle purchase
- The customer’s money is safeguarded
- Customers get peace of mind in the case of a total loss and won’t have to worry about pulling money out of savings to pay the balance or payment on a car that isn’t drivable
- Allows the consumer to afford a replacement car in the event that their current vehicle breaks down totaled
- Prevents credit issues from insurance claims
Is Toyota GAP Insurance Required?
No, Toyota GAP Insurance is not required, but it is a worthwhile investment for both leased and purchased vehicles. GAP insurance, according to many Toyota insurance experts and consumers, is well worth the extra expense. There are various reasons why Toms River purchasers should think consider gap insurance rather than leaving everything up to chance on Long Branch’s streets:
- Depreciation begins as soon as you leave the dealership lot
- Accidents can happen at any time, including right after you drive off the lot in a new vehicle
- The majority of insurance providers will only cover the value of your car at the time of the accident
- GAP coverage compensates you if your new car is totaled or stolen and you owe more on it than its current deemed value
If your vehicle is damaged or stolen, and you owe more than the car’s depreciated worth, Toyota’s GAP Insurance might help you pay down your remaining loan. Only the original loan or leaseholder on a new vehicle is eligible for this type of coverage. This is specifically designed to “bridge the gap” between the car’s depreciated value and the amount that is still owed on it. If you’re leasing or financing a new car, many lenders require you to have collision and comprehensive coverage on your car insurance policy until your car is paid off.
It may be available for as little as $20 per year through your regular auto insurance company.
Your dealership or car loan company may be able to sell it to you for a one-time fee.
For a one-time cost, you may acquire it from a specialized gap insurance firm.
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Toyota Gap Insurance alternate providers
- Farmers
- Nationwide
- Progressive
- Safeco
- State Farm
- Travelers
- AAA
- Allstate
- American Family
- Esurance
- Farmers
GAP insurance is meant to be used in conjunction with collision coverage or comprehensive coverage. If you have a covered claim, your collision coverage or comprehensive coverage would help pay for your totaled or stolen vehicle up to its depreciated value. Coverage is important to avoid major loss in value due to immediate depreciation. And, most vehicles’ value depreciates about 20 percent in the first year of ownership alone.
Depending on the model year of the vehicle, you may be able to receive gap insurance after you purchase it from an alternate prover, but not Toyota directly. GAP coverage, in general, isn’t only available at participating dealerships and there are many local and nationally recognized insurers that include it as part of a car insurance policy. Purchasing gap insurance through an insurance provider is generally less expensive than purchasing it from a car dealership.
In order to get gap insurance, some insurers require that your car be brand new and may require some additional documentation. You’ll want to save documents that show you are the vehicle’s original owner and have the original lease or loan on the vehicle, and there may be requirements for a vehicle newer than two or three model years.
8 QUESTIONS TO ASK WHEN BUYING A USED CAR
So you’re in the market for a used vehicle? We’ve gone ahead and prepped some essential questions to ask when buying a used car.
For any vehicle, GAP coverage is strongly recommended for customers who:
- Make a down payment of less than 20% of the purchase price
- Transfer negative equity from an old car loan to a new one
- Finance for at least 72 months
- Finance a car with a high depreciation rate (specific Toyota models)
- Leased cars
When in doubt, Toyota’s GAP insurance is a strong option to consider and worth a conversation at the dealership. Be sure you understand the coverage, but for a few extra dollars on a vehicle lease, extra protection isn’t a bad option.
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