In the event a leased vehicle is stolen or totaled, the difference between the early termination payoff amount, not including any past-due amounts, and the amount for which the vehicle is insured before the insurance deductible and any other policy deductions are subtracted. The definition of gap amount may vary in different states or in different lease agreements.
A plan that provides you financial protection in case your leased vehicle is stolen or totaled in an accident. Some plans deny gap coverage if you are in default at the time of loss. There are two types of gap coverage. One is a waiver by the lessor or assignee of the gap amount if the vehicle is stolen or totaled. The other is a contract by a third party to cover the gap amount. Under either type, you may remain responsible for the insurance deductible, for other amounts deducted from the insured amount of the vehicle by your insurance company, and for any past-due or other amounts you owe under the lease. You may also be responsible for your monthly payments until the lessor receives your insurance proceeds.
Gross capitalized cost (gross cap cost). The agreed-upon value of the vehicle, which generally may be negotiated, plus any items you agree to pay for over the lease term (amortized amounts), such as taxes, fees, service contracts, insurance, and any prior credit or lease balance.
