In MB, what should I know about GAP insurance for car loans?

In Manitoba, GAP (Guaranteed Asset Protection) insurance is an optional financial product designed to cover the difference between your vehicle's actual cash value (ACV) and your outstanding loan balance if your car is declared a total loss or stolen and unrecovered. Given current market conditions in 2025, characterized by higher vehicle prices, longer financing terms, and rapid depreciation, many consumers find themselves "upside-down" on their car loans, meaning they owe more than the vehicle is worth, especially in the early years of ownership.

Why this matters: While Manitoba Public Insurance (MPI) will pay out the ACV of your vehicle in the event of a total loss, this amount is frequently less than what you still owe on your loan. Without GAP coverage, you would be personally responsible for paying that remaining loan balance out of pocket, even though you no longer have the vehicle. This can lead to a significant and unexpected financial burden, forcing you to continue making payments on a car you no longer own.

It's crucial to understand that GAP insurance is distinct from replacement-value auto insurance, which might replace your vehicle with a new one or provide a higher payout for a limited time. GAP specifically bridges the financial gap between your primary insurance payout and your loan obligation. Therefore, always review your MPI coverage and any potential private insurance add-ons, compare the cost of GAP with the potential financial risk, and understand all terms and conditions before deciding if it aligns with your financial protection needs.