Will gap insurance cover a totaled vehicle?

My girlfriend totaled her Chevy Tahoe. The insurance company says it will give her $13k for the vehicle value before totality. They say if we retain the vehicle they will pay out $7,600 for the vehicle. We still owe $13,400 on the loan, but have gap insurance in California. Will gap insurance pay the difference between $7,600 and the $13,400?

Dec 6, 2020 Ceres, CA

Renata Balasco

Dec 6, 2020

Likely your gap insurance would not cover the difference if you take the lower payout. Most gap plans are written in a way that requires you to take the totalled vehicle payoff and apply it to the loan first. You may want to check with the bank to see if there is any way to retain the vehicle if you are interested in that option. 

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