1. What Is Gap Insurance?

Gap insurance (Guaranteed Asset Protection) covers the difference between what you owe on your car loan and the vehicle's actual market value in case of total loss due to accident or theft.

2. How Does Gap Insurance Work?

The gap insurance calculation follows this simple formula:

Where:

• \( Loan \) — Outstanding loan amount (MYR)
• \( Market\ Value \) — Current market value of the vehicle (MYR)

Explanation: When your vehicle is declared a total loss, standard insurance pays only the current market value. Gap insurance covers the remaining loan balance if it exceeds the market value.

3. Importance Of Gap Insurance In Malaysia

Details: In Malaysia's automotive market where vehicles depreciate quickly, gap insurance provides crucial financial protection against being "upside down" on your car loan after an accident.

4. Using The Calculator

Tips: Enter your current outstanding loan amount and the estimated market value of your vehicle. Both values should be in Malaysian Ringgit (MYR).

5. Frequently Asked Questions (FAQ)

Q1: Who needs gap insurance in Malaysia?
A: Anyone with a car loan where the outstanding balance exceeds the vehicle's current market value, which is common in the first few years of ownership.

Q2: How much does gap insurance cost in Malaysia?
A: Typically 1-3% of the vehicle's insured value, depending on the provider and coverage terms.

Q3: When is gap insurance most valuable?
A: During the first 2-3 years of vehicle ownership when depreciation is highest relative to loan repayment.

Q4: Does gap insurance cover the full loan amount?
A: It covers the difference between the insurance payout and the outstanding loan balance, up to the policy limits.

Q5: Can I get gap insurance for used cars in Malaysia?
A: Yes, though terms and availability may vary between insurers. Some providers have age and mileage restrictions.