Due to historically high used vehicle values, today’s GAP insurance claims are very favorable, but that could change once supply chain issues are resolved. Learn how this market fluctuation impacts today’s costs and why it is crucial to adapt business practices to prepare for future shifts. (Credit: VanderWolf Images/Shutterstock.com) Due to historically high used vehicle values, today’s GAP insurance claims are very favorable, but that could change once supply chain issues are resolved. Learn how this market fluctuation impacts today’s costs and why it is crucial to adapt business practices to prepare for future shifts. (Credit: VanderWolf Images/Shutterstock.com)

A new vehicle starts to depreciate as soon as it is driven off the car dealer’s lot. According to the Insurance Information Institute, a car’s value can go down 20%-30% in the first year and continues to decline over the time of ownership.

GAP insurance, or “guaranteed asset (or auto) protection,” ensures that vehicle owners won’t incur a loss if the vehicle is damaged beyond repair (total loss), such as in an accident or flood, or if the vehicle is stolen and never recovered. GAP coverage pays the difference between what the insurer pays (settlement amount) and the amount still owed on the borrower’s loan.

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