GAP Addendum Quiz

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Questions and Answers

What is the main purpose of the GAP Addendum?

  • It provides collision insurance for the vehicle.
  • It replaces the need for comprehensive insurance.
  • It provides vehicle maintenance services.
  • It waives the GAP amount in the event of a constructive total loss. (correct)

Which of the following is NOT a responsibility of the borrower according to the GAP Addendum?

  • Notifying the seller/creditor in writing to cancel coverage.
  • Filing claims with the automobile insurance company.
  • Processing insurance claims for the seller/creditor. (correct)
  • Maintaining collision and comprehensive insurance on the vehicle.

When does the GAP Addendum terminate?

  • Upon reaching 100,000 miles on the vehicle.
  • When the vehicle is stolen.
  • Upon payment in full of the financing contract. (correct)
  • When the vehicle undergoes maintenance.

What is defined as a "Constructive Total Loss"?

<p>Accidental damage or theft resulting in the vehicle being declared a total loss. (D)</p> Signup and view all the answers

Which of the following vehicles is NOT covered under the GAP Addendum?

<p>Limousines and taxis. (C)</p> Signup and view all the answers

What is the maximum deductible amount waived by the GAP Addendum on the Primary Carrier's policy?

<p>$1,000 (C)</p> Signup and view all the answers

Under what condition is there no right to cancel the GAP Addendum?

<p>When a benefit has been provided or is in process. (B)</p> Signup and view all the answers

Which document is NOT required to be submitted in the event of a Constructive Total Loss?

<p>A copy of the vehicle registration. (B)</p> Signup and view all the answers

What happens if a customer misrepresents any material fact related to a benefit request?

<p>The GAP addendum is voided, and charges are returned. (C)</p> Signup and view all the answers

What is the process for canceling the GAP Addendum within 30 days of purchase?

<p>Notify the seller/creditor in writing. (C)</p> Signup and view all the answers

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Study Notes

GAP Addendum Overview

  • Assists in waiving the GAP amount when a vehicle is declared a constructive total loss.
  • Serves to protect borrowers in specific circumstances, but does not cover collision insurance or maintenance services.

Borrower Responsibilities

  • Borrowers must maintain collision and comprehensive insurance on their vehicles.
  • Required to notify the seller/creditor for coverage cancellations.
  • Does not include the responsibility for processing insurance claims on behalf of the seller/creditor.

Termination of the GAP Addendum

  • The GAP Addendum concludes upon full payment of the financing contract.
  • Other events, such as vehicle theft or maintenance, do not automatically terminate the addendum.

Constructive Total Loss Definition

  • Defined as accidental damage or theft that results in the vehicle being declared a total loss, affecting the coverage under the GAP Addendum.

Vehicle Coverage Limitations

  • Vehicles used for ridesharing services (e.g., Uber or Lyft) and commercial vehicles such as limousines or taxis are not covered by the GAP Addendum.

Deductible Waiver

  • The GAP Addendum can waive a maximum deductible of $1,000 on the Primary Carrier's policy.

Cancellation Rights

  • Right to cancel the GAP Addendum is voided once a benefit has been provided or is in process.

Required Documentation for Constructive Total Loss

  • Original financing contract and a copy of the insurance settlement check are necessary.
  • Vehicle registration is not required to be submitted for a constructive total loss claim.

Misrepresentation Consequences

  • If a customer misrepresents material facts related to benefit requests, the GAP Addendum is voided and previously incurred charges may be refunded.

Cancellation Process

  • Within 30 days of purchase, customers need to notify the seller/creditor in writing to cancel the GAP Addendum.

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