Guaranteed Asset Protection (GAP) is a contract that may address part of the difference between an auto finance payoff and a primary insurance settlement after a qualifying total loss. Product names are similar, but deductibles, caps, exclusions, cancellation rights, and claim procedures vary. This page models the arithmetic without asserting eligibility.
Three documents are needed
- Finance payoff statement: current payoff, per-diem interest, included products, and any past-due amount.
- Primary insurer settlement: actual cash value, deductible, adjustments, and payment date.
- GAP contract: covered event, benefit formula, cap, deductible treatment, exclusions, cancellation, and claim deadline.
Illustrative calculation
Assume a payoff of $28,000, a primary settlement value of $24,000, and a $1,000 deductible. A simple uncovered-balance model is $28,000 − ($24,000 − $1,000) = $5,000. The contract may calculate the benefit differently or exclude part of the balance, so $5,000 is not a promised payout.
Contract fields to copy
| Field | Why it changes the result |
|---|---|
| Covered total loss or theft | Defines the event that can trigger review |
| Maximum benefit / loan-to-value cap | Can limit the modeled difference |
| Primary deductible treatment | May be included, limited, or excluded |
| Rolled-in products or prior negative equity | May not be part of the eligible balance |
| Claim deadline and required records | Controls submission timing and evidence |
| Cancellation and refund formula | Matters after early payoff, refinance, or sale |
Purchase and cancellation boundary
The CFPB describes GAP as generally optional and advises borrowers to compare the cost and coverage. A lender or dealer statement, finance agreement, state rule, and specific GAP contract must be checked before concluding that a product is required or refundable.
Build a claim packet
Keep the purchase agreement, finance contract, GAP contract, payoff statement, valuation report, primary settlement letter, loss date, payment ledger, and communications. Ask for any denial or adjustment with the specific contract clause cited.
Separate three different balances
Maintain separate lines for the finance payoff, primary insurance settlement, and GAP benefit calculation. Do not combine taxes, late fees, service contracts, prior negative equity, or refundable add-ons unless the GAP contract expressly includes them. That separation shows why the amount still owed to a lender may differ from an eligible GAP benefit.
If the vehicle is sold, refinanced, or paid off before the scheduled end date, keep the payoff date and cancellation request. Refund availability and calculation depend on the contract and applicable law; this page does not assume that every product is refundable.
Source basis: Consumer Financial Protection Bureau guidance on GAP products and the actual GAP contract. This page does not sell GAP or estimate an individual claim.