1. What is Boat Gap Insurance?

Boat gap insurance covers the difference between what you owe on your boat loan and the boat's actual cash value (ACV) if it's totaled or stolen. This protects you from having to pay out of pocket for a boat you can no longer use.

2. How Does the Calculator Work?

The calculator uses a simple formula:

Where:

• \( Loan \) — The outstanding amount on your boat loan
• \( Boat\ ACV \) — The actual cash value of your boat (what insurance would pay if totaled)

Explanation: The gap represents the amount that wouldn't be covered by standard insurance in case of a total loss.

3. Importance of Gap Calculation

Details: Calculating the potential gap helps boat owners understand their financial risk and decide if gap insurance is worth the additional premium.

4. Using the Calculator

Tips: Enter your current boat loan balance and the estimated actual cash value of your boat (check with your insurer or use current market value). Both values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: When is gap insurance most important for boats?
A: It's most valuable in the early years of ownership when depreciation is highest and loan balance is largest.

Q2: Does gap insurance cover mechanical failures?
A: No, it only covers the difference between loan balance and ACV in case of total loss.

Q3: How much does boat gap insurance typically cost?
A: Premiums vary but are usually a few hundred dollars per year, depending on the boat value and loan amount.

Q4: Can I get gap insurance at any time?
A: Most insurers require you to purchase it when you first buy the boat or soon after.

Q5: Does gap insurance cover negative equity from a trade-in?
A: Typically no - it only covers the gap on the current boat's loan versus its value.