GAP Product Features & Pricing Flashcards
6 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 6 GAP Product Features & Pricing flashcards as text
What does GAP insurance primarily cover in the event of a total loss?
Answer: The difference between the vehicle's ACV and the outstanding loan balance
GAP insurance covers the 'gap' between a vehicle's actual cash value (ACV) paid by the primary insurer and the remaining loan or lease balance.
Which of the following is typically NOT covered by a standard GAP product?
Answer: Overdue loan payments carried over into the balance
Standard GAP products exclude past-due payments that were rolled into the loan, as these represent pre-existing financial obligations unrelated to the loss event.
A dealer-sold GAP product is most commonly structured as a:
Answer: Single-premium addendum to the finance contract
Dealer-sold GAP is typically offered as a single-premium product added to the vehicle finance contract and financed into the loan.
What is the primary pricing driver for GAP products offered through franchised dealerships?
Answer: The loan-to-value (LTV) ratio of the financed vehicle
LTV ratio is the key pricing driver because a higher LTV means greater potential exposure between the ACV and the outstanding balance.
Which GAP product feature allows the insured to receive a credit toward a replacement vehicle purchase?
Answer: Replacement vehicle credit or new-vehicle allowance rider
A replacement vehicle credit rider provides an additional benefit—typically $1,000–$1,500—toward the purchase of a replacement vehicle after a total loss.
A GAP product that also reimburses the borrower's primary insurance deductible (up to $1,000) is known as a:
Answer: GAP Plus or GAP with deductible reimbursement
GAP Plus products bundle standard GAP coverage with a deductible reimbursement benefit, reducing the borrower's out-of-pocket costs after a total loss.