- A form of automotive insurance that can be purchased if the insured vehicle's book value is less than the remaining amount owed for the vehicle. Gap insurance makes sure that in the event of a total loss, the policyholder will receive an amount of compensation that fully covers the amount owing on the insured's financing/lease agreement.
Related Terms and Acronyms
- Actual Cash Value (ACV) — Acronym,
- The replacement cost of an insured asset with depreciation accounted for.
- The amount of money that a broker or dealer has invested in the purchase and repair of a used vehicle.
- Collision Insurance — Definition,
- Auto insurance that provides coverage for damages to the policyholder's vehicle in the event that the policyholder is at fault in a traffic collision.
- Comprehensive Insurance — Definition,
- Auto insurance that covers damages not resulting from a collision, and for vehicle theft.
- Insurance (insur) — Abbreviation,
- An arrangement where one party provides financial protection to another party for specific damages or losses.
- Uninsured Motorist Coverage — Definition,
- Auto insurance that covers collision damages caused by a driver without auto insurance.
- Upside-down — Definition,
- A position that consumers find themselves in when the outstanding balance of a loan is higher than the current fair market value of the property purchased with the loan. See also "Depreciation."