Sorry if this is a stupid question and sorry for the wall of text...
So I was reading over my purchase agreement and insurance coverages and I'm confused by the wording. I originally thought GAP insurance paid off whatever balance was remaining on a vehicle once the insurance has paid the value of the car. I am now learning that Progressive doesn't cover the full loan, but only a portion.
Based on what the contracts say, I am worried that in the event of an accident, I will be left with a balance to pay on the vehicle.
I just need help understanding the terminology and what it all means if anyone can help.
The facts:
So I was reading over my purchase agreement and insurance coverages and I'm confused by the wording. I originally thought GAP insurance paid off whatever balance was remaining on a vehicle once the insurance has paid the value of the car. I am now learning that Progressive doesn't cover the full loan, but only a portion.
Based on what the contracts say, I am worried that in the event of an accident, I will be left with a balance to pay on the vehicle.
I just need help understanding the terminology and what it all means if anyone can help.
The facts:
- Car is a 2017 Kia Rio LX (worth somewhere between $7-8k, depending on who you ask)
- Bought in early 2022.
- Payoff balance left owed on car is in the ballpark of $13.5k (I know, I know)
- Insurance policy through Progressive with 1K deductible.
- Have GAP through finance company (Carvana/Ally)
- Have Loan/Lease Payoff through Progressive
- - From Carvana/Ally/purchase agreement: "If the amount financed or lease cap cost exceeds 150% of the lowest of (a) the Vehicle purchase price or agreed upon value as shown on the Financial Agreement*, (b) MSRP, or (c) J.D. Power or equivalent retail book value, the settlement will be reduced in proportion to the amount that exceeds the stated limit of 150%. In no event will this GAP Addendum*
waive any amount in excess of fifty-thousand dollars ($50,000)." - (The amount financed according to the Financial Agreement is $14925.16. JD Power estimate is $8,729 - $10,022. Original MSRP is $15,395)
- - From Progressive: "If your vehicle is stolen or totaled in an accident and you have loan/lease payoff coverage, we'll pay the difference between your vehicle's value and what you owe on it, up to 25% of your vehicle's value (though the exact limit can vary by state)."