GAP coverage, at a mechanical level

GAP, guaranteed asset protection, is a contract that pays a named shortfall after a total loss. It is not a shrinking of the loan in ordinary months. Lesson 12 named negative equity as loan minus mark. GAP, where this contract pays, is the difference between the loan and what a collision payment produces, which is a different subtraction.

Cinderwell Dealer's book at the date of a total loss: mark $18,400, loan $22,150. Collision pays $17,820 after a deductible. If GAP covers the difference to the loan, it pays $22,150 − $17,820 = $4,330. Negative equity against the mark was $22,150 − $18,400 = $3,750. GAP paid $4,330 because the collision figure, not the mark, is the input this contract uses. Those two shortfalls are not the same number.

This contract does not pay the deductible, unpaid installments, or excluded add-ons. Contracts vary, and the rules that govern a deficiency after a total loss vary by state. A reader's own situation belongs with a qualified professional. Track 9 lesson 2 computes a shortfall line by line on a securities facility: each input can move independently, and the last line conceals which one moved. GAP is that last line after a total loss. Reading it as 'the gap to the mark' misidentifies the inputs.

The $895 GAP product from lesson 15 is still sitting in the principal until it is paid down, whether or not a claim is ever made. A product that pays a shortfall after a total loss is not, in ordinary months, a reduction of LTV. Lesson 17 is the same observation for a repair claim.

GAP pays a contractual difference after a total loss. It does not, in this contract, pay every line that sits around that difference. The contract names the lines.