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

In Nova Scotia, GAP (Guaranteed Asset Protection) insurance is an optional financial product designed to protect car loan borrowers from a significant financial shortfall in the event of a total loss. When your vehicle is declared a total loss due to an accident or theft, your standard auto insurance policy typically pays out the Actual Cash Value (ACV) of the vehicle, which accounts for depreciation. Given the rapid depreciation of new vehicles and the prevalence of longer loan terms in the Canadian market, especially under current economic conditions (e.g., 2025), the ACV can often be considerably less than your outstanding loan balance. GAP insurance bridges this 'gap,' covering the difference between your insurer's payout and the remaining amount you owe on your car loan, preventing you from being left with debt for a vehicle you no longer possess. It is crucial for Nova Scotian consumers to compare GAP coverage, often offered by dealerships or lenders, with "replacement-value" or "new car replacement" endorsements available through your primary auto insurer. These auto insurance endorsements can sometimes offer similar protection-like replacing your totaled vehicle with a new one or paying out the original purchase price-for a potentially lower premium, though their terms, duration, and eligibility criteria may differ. Understanding these distinct options is vital to ensure comprehensive financial protection and peace of mind against substantial out-of-pocket expenses in the unfortunate event of a total loss.