What Does Toyota GAP Insurance Cover?

GAP insurance through Toyota Financial Services, also known as Guaranteed Auto Protection or GAP coverage, is an add-on protection policy that can save you thousands if your vehicle is totaled or stolen. Here’s a look at exactly what Toyota’s GAP insurance covers and what common gaps in auto insurance it is designed to fill.

What is GAP Insurance?

Guaranteed Auto Protection, commonly referred to as “GAP insurance”, is designed to pay the difference between your primary auto insurance settlement and the remaining loan or lease balance on your vehicle after a total loss.

GAP covers the “gap” left by standard insurance in situations like

Your car is totaled in an accident and deemed a complete loss by your insurer.
Your vehicle is stolen and not recovered.
Your car is damaged by fire, flood, vandalism, or other disasters and declared a total loss.

In these scenarios, your regular car insurance will pay out based on the actual cash value or market value of your vehicle at the time it was totaled. However, this payout amount is often less than what you still owe on your loan or lease.

GAP steps in to cover the remaining unpaid balance, minus your deductible and certain fees. This prevents you from being stuck making payments on a destroyed vehicle with no car to show for it.

Why is GAP Coverage Needed?

Without GAP insurance, you could be left paying thousands out of pocket if your vehicle is totaled and your primary insurance payout doesn’t fully cover the remaining loan or lease balance. This typically happens because of depreciation and insufficient policy limits.

For example:

You owe $18,000 still on your auto loan, but your car is now only worth $12,000 due to depreciation.
Your insurance company declares it a total loss and pays actual cash value of $12,000.
Without GAP coverage, you’d be stuck paying the $6,000 difference.

GAP insurance is designed to cover this difference so you aren’t burdened with leftover loan payments for a car you no longer have.

What Does Toyota GAP Specifically Cover?

Toyota’s GAP plan has some key coverages:

Remaining Loan/Lease Balance

Covers up to $50,000 in the unpaid balance remaining after your primary insurance settlement

Deductible Reimbursement

Reimburses up to $1,000 of your collision insurance deductible

Excess Wear and Use Fees

Covers early lease termination fees up to $1,000 total

Replacement Vehicle Coverage

Transfers GAP to a replacement Toyota vehicle

Car Rental Allowance

Pays for a rental car for up to 5 days at $35 per day

Toyota GAP insurance provides protection against financial loss in the event your Toyota is totaled. It gives you peace of mind that your loan or lease will be taken care of.

What Does GAP Not Cover?

While GAP insurance fills many gaps left by standard auto policies, there are some limitations:

Doesn’t cover missed or overdue payments on your loan/lease
Doesn’t pay insurance deductibles over $1,000
Doesn’t cover fees for excessive wear and tear or excess mileage
Doesn’t apply if you have no comprehensive/collision coverage
Doesn’t pay claims if you stop paying on your loan/lease
Doesn’t cover accidents that occur before the GAP policy starts

Always read the full policy documents so you understand any exclusions or restrictions. GAP is not a replacement for comprehensive and collision coverage.

Who Needs GAP Insurance?

GAP coverage is recommended for many auto buyers but tends to provide the most value when:

You’ve made a low down payment of less than 20%
You have a long loan term of 5+ years
You have negative equity rolled into your loan
Your vehicle depreciates quickly or has high miles
Your primary auto insurance limits are insufficient

Without GAP, these situations increase the chance of ending up “upside-down” and owing more than insurance will pay if your car is totaled. GAP provides a safety net.

How Much Does Toyota GAP Insurance Cost?

The cost of GAP coverage from Toyota will depend on factors like your vehicle, loan amount, and coverage options selected. On average expect to pay:

$395 to $895 for GAP coverage

On longer loans of 6-7 years, GAP can ultimately save you thousands versus being stuck with the remaining balance. Many see it as a worthwhile investment for peace of mind.

How to Get Toyota GAP Insurance

Toyota’s Guaranteed Auto Protection can only be purchased when you initially obtain financing on a new or used Toyota vehicle. Here are some tips to get coverage:

Add GAP when applying for auto financing at the dealership
Discuss GAP options with your Toyota sales representative
Review the available plans and select coverage limits
Complete the GAP section of your financing paperwork
Submit the GAP fee along with your down payment

While optional, GAP insurance can provide valuable protection against financial loss from a totaled or stolen vehicle. Be sure to evaluate this extra coverage when purchasing or leasing your next Toyota.

The Bottom Line

GAP insurance like Toyota’s Guaranteed Auto Protection plan covers the difference between your auto loan balance and primary insurance settlement if your car is declared a total loss. This prevents being stuck making payments for a vehicle you no longer have due to an accident, theft, or other disaster. While not mandatory, GAP is worth considering to have peace of mind that your investment is protected.

Gap Insurance and Why You Need It -Russ Darrow Toyota

FAQ

Does GAP insurance cover deficiency balance?

Additionally, GAP prevents the deficiency loan balance from being added to a new loan in the event of a total loss, and protects your credit rating. Receive a free insurance quote. GAP is typically offered by the lender at the time you purchase your car but can also be purchased through your insurance company.

What does gap mean in car insurance?

Gap insurance stands for Guaranteed Asset Protection insurance. It is an optional, add-on coverage that can help certain drivers cover the “gap” between the financed amount owed on their car and their car’s actual cash value (ACV), in the event of a covered incident where their car is declared a total loss.

Will GAP insurance cover hail damage in Texas?

What Does GAP Insurance Cover? No matter how you total your vehicle, GAP insurance applies. So if your insurance totals out your vehicle due to a collision, theft, weather damage (hail, tornado, fire, flood, etc.), or vandalism, GAP insurance will cover whatever the difference is.

Will GAP insurance cover negative equity?

Does GAP insurance cover negative equity? Yes. Negative equity (aka an upside-down loan) is another term for the gap between what you owe on your auto loan and the car’s actual value. GAP insurance covers the difference between the two.

What is Toyota gap coverage?

Toyota’s GAP coverage is called “Guaranteed Auto Protection” and is a voluntary protection package that you can add, and can be canceled through the GAP agreement, certificate, or waiver.

Does gap cover car insurance?

The coverage is offered through Toyota Financial Services (TFS) and will waive or reimburse the difference between the amount still owed on your loan or lease contract after your insurance settlement (assuming you have coverage) before taxes and fees. In most areas, GAP will cover your deductible on your full vehicle insurance.

Does GAP insurance cover a stolen car?

Gap insurance covers the difference between what you owe on a car lease or loan and the amount paid out in a total loss settlement from an auto insurer, minus your deductible. There is only a “gap” to cover if you owe more on your car than it’s worth. Does Gap Insurance Cover Theft? Yes, gap insurance will pay if your car is stolen.

Does gap cover a total loss?

And, for your convenience, the cost of GAP can be added to your finance or lease contract and included as a portion of your monthly payments (subject to credit approval).4 GAP is available in most states. 3. See your auto insurance policy for actual coverage in the event of a total loss. 4. Not all customers will qualify.