GAP Addendum Quiz

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Questions and Answers

What does the GAP Addendum cover in the event of a Constructive Total Loss?

Entire vehicle replacement

Remaining loan balance (correct)

Coverage of legal fees

Payment of insurance premiums

Which of the following is true about the GAP Addendum?

It replaces collision insurance

It is a substitute for property damage insurance

It automatically processes insurance claims

It waives a portion of the loan balance after a total loss (correct)

Which entity is responsible for handling insurance claims according to the GAP Addendum?

The insurance company

The GAP Administrator (correct)

The Customer/Borrower

The Seller/Creditor

The term 'Actual Cash Value (ACV)' refers to:

The market value of the vehicle at the time of loss Signup and view all the answers

Which of the following vehicles are excluded from GAP coverage?

Vehicles with a salvage title Signup and view all the answers

What is the maximum deductible amount that can be waived under the GAP Addendum?

$1,000 Signup and view all the answers

What must the Customer/Borrower maintain for the vehicle, as required by the GAP Addendum?

Comprehensive and collision insurance Signup and view all the answers

What happens if the Customer/Borrower fails to provide the required documentation to the GAP Administrator after a Constructive Total Loss?

No waiver will be made under the addendum Signup and view all the answers

How long does the Customer/Borrower have to cancel the GAP Addendum for a full refund?

30 days Signup and view all the answers

Which of the following is not considered a Constructive Total Loss?

Minor damages requiring repairs Signup and view all the answers

When can the GAP Addendum be purchased?

Only at the time the financing contract is originally executed Signup and view all the answers

What is the 'Net Payoff' as defined by the GAP Addendum?

The amount due as of the Date of Loss, including unpaid monthly payments Signup and view all the answers

Which of the following is a condition under which the GAP Addendum will terminate?

When the vehicle is repossessed Signup and view all the answers

A GAP Addendum can be canceled within 30 days for a full refund if:

The vehicle has not suffered a total loss Signup and view all the answers

Which of the following would disqualify a vehicle from GAP coverage?

Having a salvage title Signup and view all the answers

The GAP Addendum does not cover loss resulting from:

Damage from a race or contest Signup and view all the answers

The 'Primary Carrier' refers to:

The insurance company providing physical damage coverage Signup and view all the answers

If a vehicle is repossessed, what happens to the GAP Addendum coverage?

It terminates immediately Signup and view all the answers

Which of the following is true about a Commercial Vehicle under GAP coverage?

Commercial vehicles must be specifically included in the contract Signup and view all the answers

How is the refund calculated if the GAP Addendum is canceled after 30 days?

Pro-rated based on the unused portion Signup and view all the answers

Study Notes

GAP Addendum Overview

Covers entire vehicle replacement and remaining loan balance in case of a Constructive Total Loss.
Excludes coverage for payment of insurance premiums and legal fees.

Key Features of the GAP Addendum

Does not replace collision insurance; it supplements existing coverage.
Waives a portion of the loan balance only after a total loss occurs.
Not a substitute for property damage insurance and does not process claims automatically.

Claim Handling and Responsibilities

Claims are managed by the GAP Administrator rather than the insurance company or borrower.
The customer must maintain comprehensive and collision insurance on the vehicle.

Actual Cash Value (ACV)

Defined as the market value of the vehicle at the time of loss, not the purchase price or financed amount.

Vehicle Eligibility for GAP Coverage

Excludes vehicles with a salvage title and commercial vehicles used for snow removal.
Private passenger automobiles and four-wheel vans are eligible.

Deductible Waiver and Cancellation Policy

Maximum deductible that may be waived is $1,000.
Customers have 30 days to cancel for a full refund.

Constructive Total Loss Criteria

Includes situations where total damage is declared, theft occurs without recovery after 30 days, or repair costs exceed ACV.
Minor damages do not qualify as a Constructive Total Loss.

Timing for Purchasing GAP Addendum

Can be purchased within the first year after signing the financing contract, not solely at the contract's original execution.

Financial Definitions and Terms

"Net Payoff" is the total amount due, including unpaid monthly payments, as of the Date of Loss.
A vehicle is disqualified for coverage if it has a salvage title or if coverage is purchased before the financing contract.

Refund and Cancellation Conditions

Full refunds are given if the GAP Addendum is canceled within 30 days without any total loss.
Post-cancellation refunds after 30 days are pro-rated based on unused coverage period.

Coverage Limitations

GAP Addendum does not cover losses from theft recovery within 30 days, damage from racing, or usage of commercial vehicles.
If a vehicle is repossessed, the coverage under the GAP Addendum terminates immediately.

Commercial Vehicle Provisions

Specific commercial vehicles must be included in the GAP agreement to receive coverage; not all commercial vehicles qualify.

Primary Carrier and Claims Management

The "Primary Carrier" refers to the insurance company offering physical damage coverage, not the GAP claims handler or the dealership.

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Description

Test your knowledge on the GAP Addendum and its implications in the event of a Constructive Total Loss. This quiz covers essential aspects such as vehicle replacement, loan balances, and insurance responsibilities. See how well you understand GAP coverage.