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

In Ontario, 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 due to theft or an accident. New vehicles, especially in the Canadian market, typically depreciate significantly faster than the loan principal is paid down, particularly with low down payments or extended financing terms (e.g., 72-96 months). This means that if your car is totaled, your standard auto insurance payout, based on its depreciated ACV, might not fully cover what you still owe the lender. Without GAP coverage, you would be personally liable for this "gap" amount, potentially thousands of dollars, even though you no longer have the vehicle. It's crucial to compare this offering, often provided by dealerships or lenders, with "replacement value" or "limited waiver of depreciation" endorsements available from some auto insurers in Ontario, as these can offer similar protection but with different terms and costs. Always review the policy details to ensure it aligns with your financial situation and existing insurance coverage, as market conditions in 2025 and beyond will continue to see rapid depreciation for new vehicles.

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