What is TAPP Gap?
Without proper coverage, the gap between a vehicle’s settlement value and what your customer owes can be substantial. TAPP Gap is an extra layer of protection that can be added to an existing insurance plan. If a vehicle is totaled, gap coverage pays the difference between the settlement and its actual value.
Your customer’s lender may require gap coverage.
If you finance your vehicle with a car loan, the lender might require loan gap coverage in addition to collision and comprehensive coverage. If you lease a vehicle, lease gap coverage may already be included in the cost.
Your customer’s policy pays according to actual cash value.
Standard comprehensive and collision car insurance policies help pay for the replacement of the vehicle if it’s totaled – up to the limits of your policy and the car’s actual cash value. ACV is equal to the cost of the car when it was new, minus depreciation for age, mileage, physical condition, and other factors. After one year, the ACV of a car is thousands less than what your customer paid for it. In turn, your customer is left with an expensive balance on a loan or lease. TAPP’s gap coverage may cover some, or all, of that amount.
Here’s an example of how gap insurance helps your customer:
Let’s say your customer’s car cost $35,000 when it was new, and they currently owe $30,000. If the car is totaled, the ACV of the vehicle may be only $25,000. With a deductible of $500, the settlement is only $24,500. Instead of leaving your customer to pay the balance while searching for another car, gap coverage may pay the difference.