GAP Addendum Quiz

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"?

Accidental damage or theft resulting in the vehicle being declared a total loss. Signup and view all the answers

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

Limousines and taxis. Signup and view all the answers

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

$1,000 Signup and view all the answers

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

When a benefit has been provided or is in process. Signup and view all the answers

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

A copy of the vehicle registration. Signup and view all the answers

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

The GAP addendum is voided, and charges are returned. Signup and view all the answers

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

Notify the seller/creditor in writing. Signup and view all the answers

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.

Description

Test your understanding of the GAP Addendum and its implications for vehicle insurance. This quiz will challenge your knowledge about its purpose and the responsibilities of the borrower. Dive in and see how well you know this important component of auto financing.