Question

An auto-mobile insurance option, available in some states, that covers the difference between a car’s actual cash value when it is stolen or wrecked and the amount the consumer owes the leasing or finance company is called?

A Double Insurance Correct Answer Incorrect Answer
B Commercial Insurance Correct Answer Incorrect Answer
C Industrial Insurance Correct Answer Incorrect Answer
D Gap Insurance Correct Answer Incorrect Answer
E None of these Correct Answer Incorrect Answer

Solution

Gap insurance is a type of auto insurance that car owners can buy to protect themselves against losses that can arise when the amount of compensation received from a total loss does not fully cover the amount the insured owes on the vehicle's financing or lease agreement. This situation arises when the balance owed on a car loan is greater than the book value of the vehicle

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