Rhode Island Insurance Adjuster Exam 2026 – Complete Study Guide

Question: 1 / 400

What does gap insurance cover?

The difference between the deductible and claims amount

The difference between what is owed on a vehicle and its market value

Gap insurance is designed to cover the difference between what you owe on a vehicle and its market value in the event that the vehicle is totaled or stolen. When a car is financed or leased, the amount owed may be higher than the actual cash value of the vehicle due to depreciation. This insurance ensures that if a claim is made, the policyholder will receive enough compensation to cover the outstanding loan or lease balance, preventing financial loss that could occur if they were to pay off the loan while receiving a lesser amount for the vehicle's market value.

This type of coverage is particularly valuable for car buyers who make a small down payment or those who are financing a new car, as these vehicles typically lose value quickly. Understanding the purpose of gap insurance underscores the importance of protecting against potential financial shortfalls in such situations.

Get further explanation with Examzify DeepDiveBeta

The overall cost of insurance premiums

The expenses incurred during vehicle repairs

Next Question

Report this question

Subscribe

Get the latest from Examzify

You can unsubscribe at any time. Read our privacy policy