To calculate the gap coverage, subtract the actual price (AP) from the total coverage (TC).
The Gap Coverage Calculator calculates the difference between the total coverage of your vehicle and the actual price (or the remaining balance) after an accident or theft. This calculation is essential for understanding how much your gap insurance will cover.
For example, if you owe more on your vehicle than its current value, gap insurance will pay the difference, protecting you from financial loss.
Formula
| Variable | Description |
|---|---|
| GC | Gap coverage amount |
| TC | Total coverage amount |
| AP | Actual price or remaining loan balance |
Solved Calculations
Example 1:
For instance, if your total coverage is $30,000 and the actual price of the car is $25,000, the gap coverage is:
| Step | Calculation |
|---|---|
| Total Coverage (TC) | $30,000 |
| Actual Price (AP) | $25,000 |
| Result | $30,000 – $25,000 = $5,000 |
Answer: The gap coverage is $5,000.
Example 2:
Similarly, if the total coverage is $15,000 and the actual price is $12,500, the gap coverage is:
| Step | Calculation |
|---|---|
| Total Coverage (TC) | $15,000 |
| Actual Price (AP) | $12,500 |
| Result | $15,000 – $12,500 = $2,500 |
Answer: The gap coverage is $2,500.
What is the Gap Coverage Calculator?
The Gap Coverage Calculator is a seamless tool. One can use it to discern the difference between the current value of their car and what they owe on it. This gap refers to the amount that traditional car insurance does not cover in case of a total loss.
Gap insurance, which is typically purchased in addition to regular auto insurance, can cover this difference, protecting you from financial loss if your car is totaled.
To use this calculator, you will need to input the current value of your car, the amount you owe on your car loan, and any other relevant details. The calculator will then determine the “gap” between what your car is worth and what you owe, giving you a better understanding of the insurance coverage you need.
Final Words:
In short, the Gap Coverage Calculator is an essential tool for anyone looking to protect themselves financially in case of a car accident. It helps you assess the value of gap insurance, ensuring you have adequate coverage in place.
