Guaranteed Asset Protection insurance is insurance offered by Nissan and other finance companies. It does not replace auto liability and physical damage insurance. Under GAP insurance, if you suffer a total loss of your car--defined by Nissan's agreement as "a situation where the vehicle is lost or damaged beyond economic repair"--and the insurance company values the car at less than the amount you still owe to the finance company, the GAP insurance will make up the difference so that you do not lose money on the lease.
What GAP Pays
If you suffer a total loss of your car, GAP insurance will pay to your finance company the difference between the amount of money you still owe on the car and the value of the car. GAP will cover a discrepancy like this up to a maximum of either $5,000 or $10,000, depending on the option you select when you purchase the coverage. GAP will also pay either $500 or $1,000--depending on the option--directly to you as reimbursement for out-of-pocket expenses.
What GAP Doesn't Pay
GAP will only pay the amount you owe on the car from your original agreement. It won't cover interest, fees or penalties. If your insurance policy has changed since purchasing the GAP policy, and you haven't changed the latter accordingly, you won't be covered for any increased indebtedness created by the newer policy. GAP also becomes invalid if the car has been used or tested for any kind of motor sport, driver instruction, commercial passenger conveyance, emergency service, law enforcement or courier work.
Expiration and Cancellation
You may cancel GAP insurance at anytime by contacting Nissan, requesting a cancellation, and receiving its consent. Nissan may cancel the policy if it falls within their legal rights. If a GAP policy is cancelled, the premium will be reduced to cover cancellation fees and the time the policy was in force, with the remainder paid to you.
Do You Need GAP?
Almost everyone leasing a car should purchase GAP because it protects against losses you can incur through no fault of your own. The only circumstance under which GAP would be unnecessary would be if your personal auto insurance policy provided GAP insurance. Ask your personal insurance agent for details.
- Wreck image by Mads Blumensaat from Fotolia.com