GAP GAP Product Features & Pricing 2

Question 1

Which vehicle type is generally EXCLUDED from most standard GAP programs?

Accepted Answer

Commercial vehicles over a specified GVWR threshold

Answer

Commercial vehicles over a certain gross vehicle weight rating (GVWR) are typically excluded because their depreciation and value schedules differ significantly from personal-use vehicles.

Question 2

When a GAP product is cancelled mid-term, how is the unearned premium typically calculated?

Accepted Answer

Pro-rata or Rule of 78s method based on the program terms

Answer

Unearned premium refunds on cancelled GAP products are most commonly calculated using a pro-rata or Rule of 78s method as specified in the contract terms.

Question 3

What is the standard maximum loan term covered under most GAP products offered in the US?

Accepted Answer

84 months

Answer

Most US GAP programs cover loan terms up to 84 months, aligning with the extended financing terms now common in auto lending.

Question 4

Which of the following best describes a 'financed GAP' product?

Accepted Answer

A GAP product whose single premium is included in the vehicle loan balance

Answer

A financed GAP product is one where the single upfront premium is rolled into the vehicle loan, meaning the borrower pays for it over the life of the loan with interest.

Question 5

A GAP product's 'maximum benefit cap' most directly limits:

Accepted Answer

The total dollar amount the GAP program will pay at loss

Answer

The maximum benefit cap sets the ceiling on the GAP payout—for example, a $50,000 cap means the program will not pay more than $50,000 regardless of the actual gap.

(GAP) Guaranteed Asset Protection Certified Practice Test

(GAP) Guaranteed Asset Protection Certified Practice Test

GAP GAP Product Features & Pricing 2