Which type of coverage aids in paying the difference between a vehicle's loan amount and Blue Book value?

GAP Coverage is designed to cover the difference between what you owe on your vehicle loan and its current market value, often referred to as the Blue Book value. This type of coverage is especially useful if the vehicle is totaled or stolen shortly after purchase, as new vehicles typically depreciate rapidly. When a loss occurs, standard auto insurance typically pays up to the vehicle’s actual cash value (ACV) at the time of loss, which may be significantly less than what you still owe on the loan. Without GAP Coverage, the owner would be responsible for covering that remaining loan balance out of pocket.

Comprehensive Coverage, on the other hand, generally protects against damages not involving a collision, such as theft, vandalism, or natural disasters. Collision Coverage pays for damage to your vehicle resulting from a collision with another vehicle or object, but it does not address the difference between the loan amount and the vehicle's value. Personal Liability Coverage provides protection against claims of bodily injury or property damage to others, which is unrelated to the financing of a vehicle.