Is Volkswagen Gap Insurance Worth It?
Is Volkswagen’s Guaranteed Asset Protection (gap) better than the gap coverage from your car insurance company? Probably not.
Written by James Ellaby
Reviewed by Kathleen Flear
Guaranteed Asset Protection (usually called
gap insurance
) is designed to pay or waive the difference between the insurance settlement you’d get for a totaled car and whatever you have left to pay on your loan or lease. However, it’s normally cheaper to get it through your regular car insurance provider. Buying a new car from a dealer often means getting offered all kinds of extras. You didn’t go in there planning to buy them, but the sales talk was certainly convincing. Something you’re bound to be offered when buying a new Volkswagen is gap insurance (VW calls it Guaranteed Asset Protection, but it’s also known as Guaranteed Auto Protection).
Here’s what you need to know about what that means, whether you need it or not, and whether Volkswagen is the best place to get it.
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Volkswagen’s Guaranteed Asset Protection is designed to go with new vehicle purchases from their dealerships, along with other upsell opportunities like
roadside assistance
and extended warranty coverage
. The benefit of gap insurance is that Volkswagen will waive or pay the difference between your car insurance settlement and your remaining
car loan
or lease balance if your vehicle gets totaled. In plain English, that means filling (or at least partially filling) the gap between what your insurance covers and what you might still owe on the vehicle.This also applies to natural disasters and accidents—and even
protects against financial losses from theft
. There’s no maximum dollar amount on covered losses waived and it includes a waiver of up to $1,000 for your primary insurance deductible.Something important to remember is that gap coverage at a dealership is only available at the time of financing. It’ll be available either as a one-off lump sum payment or bundled into your total loan amount, but if you turn it down at the time, you won’t be able to add it in later. This can make it seem like you need to make a quick decision on the spot, so it’s advisable to go in knowing whether you want it or not.
How much does Volkswagen GAP cost?
On average, Volkswagen dealerships charge between $400 and $700 to add GAP to your loan or lease contract when buying a new vehicle. This is almost always more expensive than if you got gap from your regular insurance company.
Volkswagen GAP vs. alternative gap insurance
So what is the difference between the GAP insurance Volkswagen wants to sell you and what you could get from your insurers? Most major insurance providers, including
State Farm
and Progressive
, offer gap insurance, so if your current provider doesn’t, it should be simple to switch to one that does.But which is better? The main appeal of getting GAP from Volkswagen while buying your new vehicle is the convenience, and they hope that you don’t notice that it’s less cost-effective for you. We’ve laid it all out in the table below, comparing the benefits of each kind of gap insurance.
Volkswagen Guaranteed Asset Protection | Gap coverage from your auto insurance company |
|---|---|
You can only get it at the time of financing |
|
$400 to $700 | $20 to $40 per year |
You can cancel at any time but after 30 days it will be subject to a fee. | Cancel any time |
Limited refunds | Refunds are standard |
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Do you need gap insurance?
So we’ve told you what gap insurance is and given you an idea of the difference between getting it from the dealership or your insurers, but do you need it?
At first, when you are likely to owe more than the new car is worth, gap insurance can be a great financial safety net in the case of something going badly wrong. Given that your shiny new vehicle will go down in value as soon as you drive it off the lot and will continue to lose value rapidly, it’s very common to spend the first few years owing more on your lease or loan than the value of the vehicle.
You might need to purchase it as part of a lease contract, but even then you may well still have the choice between buying it from Volkswagen or your insurance company. And for short-term loans or situations where you’ve been able to put down more than 20% in a down payment, gap insurance might be of limited value to you.
How to cancel Volkswagen gap insurance
If you purchase Volkswagen’s GAP, you can cancel it within 30 days of purchase and receive a full refund. After that grace period, you will still be able to cancel, but you’ll have to pay a fee.
You can also transfer your policy to another provider if a private party assumes your finance agreement, but this is again subject to a fee.
The best way to avoid needing to cancel is to fully understand what you’d be signing up for in the first place, so it would be wise to get a quote from your insurers for their gap insurance before you go to Volkswagen to get the vehicle. That way, you can be well-informed and ready to make a decision.
What is the Volkswagen gap insurance refund process?
You can usually get your GAP insurance refunded in the case of your vehicle being traded in, sold, or paid off early. It can normally take between 4-6 weeks.
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