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In NB, what should I know about GAP insurance for car loans?
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Car Loan Glossary • nb

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

In New Brunswick, GAP (Guaranteed Asset Protection) insurance is an optional financial product designed to cover the potential "gap" between your vehicle's actual cash value (ACV) and your outstanding loan balance in the event of a total loss due to accident or theft. Given current market conditions and the rapid depreciation of new vehicles, especially in the early years of a loan, a standard auto insurance payout based on ACV often falls significantly short of what you still owe. This means without GAP coverage, you could be personally responsible for paying the remaining loan balance on a vehicle you no longer own, creating a substantial financial burden.

This coverage is typically offered by dealerships or lenders in NB as a separate, elective purchase, distinct from your primary auto insurance policy. While some comprehensive auto insurance policies may offer replacement value coverage for newer vehicles, GAP insurance specifically addresses the loan shortfall. It is crucial for consumers to thoroughly review the terms, conditions, and cost of any GAP policy offered, comparing it against their financial risk and any existing replacement-value endorsements on their standard auto insurance to make an informed decision.

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