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Insurance Law/Auto GAP coverage


Hello Kevin, I am hoping I am posting this question in the right area. If I am not, I apologize.

I am thinking of switching my auto loan to Chase from a credit Union. The credit Union sold my GAP coverage and Chase does not offer such insurance. I have a 2012 Honda Civic (16500 miles). I owe $13600 and Kelly blue book values the car at around $15500. Insurance companies use a different algorithm to determine value so the actual value is lower. I put $5000 down at the time of purchase in 2012. I am unsure if the value will plummet faster than me paying it off. I hear from both sides of the financial fence about how GAP is a necessitie and vice versa. What is your view on GAP? Should I pay the higher APR with the credit Union and keep GAP or go with Chase and save about 1% off APR?

Thanks for any help you can provide.
Sincerely, Jared C.


Keep in mind that the GAP coverage only covers the difference between what you owe on the vehicle and what the insurance would pay if there is a total loss. It will not take into account the value you have in the vehicle with your down payment.

The reality is that you are "upside down" in the vehicle since the amount of your down payment ($5,000) plus the pay-off ($13,600) is higher that the total KBB value. Regardless of what book the carrier uses, it will still have to pay the "market value" of the vehicle and in that respect the KBB is what they have to go to, not an internal book of their own.

For me personally, I always drop the GAP policy once the loan amount and the KBB equal out.
Depending on how old the vehicle is, I will usually drop the comprehensive coverage as well once I pay the vehicle off and only keep the liability since my recovery would be very small in the amount of a total loss.

Hope this helps.

Kevin Hromas
JD, EGA, RPA, PLCS, CPIU, HCRI-R/C, WIND Upire/Appraiser
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Kevin Hromas


I am a licensed, executive general adjuster currently holding a Texas resident P&C license (614250), New Mexico non-resident all lines license (248774), Oklahoma non-resident P/F/M license (A299561), Florida non-resident P&C license (E117051) and a National Flood Insurance Program certification (06040100). My areas of expertise involve property and casualty issues in both residential and commercial policies with regards to claims practices and issues. I deal extensively with Lloyd's of London commercial policies and various domestic carriers for residential policies.


After a 20 year career as a General Contractor, I was employed by Allstate Insurance as an adjuster in Texas, holding various postitions within the property claims department. After leaving Allstate, I specialized in handling losses associated with major catastrophes through-out the country. (Hurricanes Isabel, Charlie, Wilma, Katrina, Ike, etc., hail storms, floods.) I am currently retained as an expert by multiple insurance defense firms in Texas for issues in litigation. I am also a certified Umpire for formal appraisals.

Member - Society of Registered Professional Adjusters Fellow - Council on Litigation Management Member - Property and Casualty Association Member - Texas Independent Insurances Adjusters Association Member - National Association of independent Insurance Adjusters Member - Houston Claims Association

Claims Magazine ( and then search 'Kevin Hromas' for a full listing of articles and quotes.),,

JD - University of Houston Law Center - 1992 BA - Southwest Texas State University - 1980 AA - South Plains College - 1977 PLCS - Personal Lines Coverage Specialist

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