RV GAP Insurance FAQs: Do You Really Need It?
When finalizing your RV purchase, "GAP Insurance" is often the last box to check. It raises many questions: "Do I really need this if I have full coverage auto insurance?" or "Is this just a dealership up-sell?" At RV Canada, we believe in educated decisions. We have compiled the most frequent questions we receive—and the answers you are likely searching for online—to help you decide if GAP is right for your financial situation.
The "Is It Worth It?" Questions
Q: I already have full coverage insurance. Why do I need GAP?
A: This is the most common confusion. Your primary insurance (Aviva, Intact, etc.) covers the Market Value of the RV at the time of the loss.
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The Problem: RVs depreciate. If you bought a trailer for $50,000, three years later it might be worth $35,000. Your insurance pays $35,000.
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The Loan: Because RV loans are often 15-20 years long, you might still owe $45,000 on the loan.
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The Gap: Your primary insurance will not pay that remaining $10,000 difference. You have to pay it. GAP Insurance covers that specific shortfall.
Q: Is GAP insurance worth it for an RV?
A: If you are financing for a long term (10+ years) or putting less than 20% down, Yes. The depreciation curve of an RV is steeper than the pay-down curve of a long-term loan. This puts you in a "negative equity" position for the first 5-7 years of the loan. Without GAP, a total loss (theft, fire, collision) could leave you paying thousands of dollars for a trailer you no longer have.
Q: Does GAP cover my deductible?
A: In many cases, Yes. Depending on the specific policy, GAP insurance often covers your primary insurance deductible (up to a certain limit, usually $500 or $1,000), further reducing your out-of-pocket expense during a stressful time.
Cost & Eligibility Questions
Q: How much does GAP insurance cost?
A: The cost varies based on the loan amount and term length, but it is typically a one-time fee ranging from $500 to $1,500. Most buyers choose to finance this into their loan, which typically adds only $2 to $5 per bi-weekly payment.
Q: Can I buy GAP insurance later?
A: Usually, No. GAP insurance must typically be purchased at the time the loan is originated (or within a very short window, like 10 days). You cannot add it 2 years later when you realize you are underwater on the loan.
Q: Can I get GAP on a used RV?
A: Yes. GAP is available for both New and Used RV loans, provided the unit meets the age requirements (usually under 10 years old) and is being financed through the dealership.
Process & Refund Questions
Q: What happens if I pay off my loan early?
A: Good news: GAP is refundable (pro-rated). If you sell the RV or pay off the loan after 3 years of a 5-year policy, you can apply for a refund of the unused premium. This makes it a very low-risk product to buy.
Q: Does GAP cover missed payments?
A: No. GAP only kicks in during a "Total Loss" event (theft, fire, unrepairable accident). It does not cover monthly payments if you lose your job (that is Creditor Disability Insurance) or if you just fall behind.
Q: What if I trade in my RV?
A: If you trade in your RV, the GAP policy ends. You can apply for the pro-rated refund to be sent to you, which you can then use as a down payment on your next unit!
Close the Gap on Your Risk. Ensure your adventure doesn't turn into a debt. Ask for a quote today.