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Coverage Terms & Conditions Flashcards

7 cards from real GAP practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

Read the first 7 Coverage Terms & Conditions flashcards as text

  1. What is the typical maximum benefit cap on a GAP waiver agreement?

    Answer: $2,500

    Most GAP waivers cap the benefit at $2,500 to $5,000 above the primary insurer's settlement, though $2,500 is the most common standard cap.

  2. Which event would most commonly trigger a GAP claim payout?

    Answer: Total loss declaration by the primary auto insurer

    GAP coverage is triggered when the primary insurer declares the vehicle a total loss, leaving a balance between ACV and the loan payoff.

  3. How does a deductible assistance provision within a GAP product benefit the customer?

    Answer: It covers the customer's primary insurance deductible up to a specified amount

    Deductible assistance covers the customer's out-of-pocket deductible on the primary claim, reducing their financial burden at total loss.

  4. Under most GAP agreements, what happens if the customer is more than 90 days delinquent on their loan at the time of loss?

    Answer: The benefit is reduced by the amount of past-due payments

    Most GAP contracts reduce the benefit by the amount of loan payments that are overdue at the time of loss.

  5. Which term describes the vehicle's market value used by the primary insurer to settle a total loss claim?

    Answer: Actual Cash Value (ACV)

    Actual Cash Value (ACV) is the depreciated market value the primary insurer pays on a total loss, which is often less than the outstanding loan balance.

  6. What does a GAP agreement's 'exclusion for credit life or disability insurance' mean?

    Answer: Amounts financed for credit life or disability insurance premiums are excluded from the GAP benefit calculation

    Premiums rolled into the loan for credit life or disability insurance are excluded because they do not represent vehicle value.

  7. If a GAP waiver is offered by a lender rather than a third-party insurer, it is regulated primarily as:

    Answer: A debt cancellation product under banking regulations

    When a lender offers GAP directly, it is structured as a debt cancellation addendum regulated by banking authorities, not as insurance.