For a gap contract, what condition must be met regarding a vehicle before the loss occurs?

For a gap contract to provide coverage, it is essential that the vehicle is under a gap contract before the loss occurs. A gap contract typically covers the difference between the amount owed on a vehicle and its actual cash value in the event of a total loss. If the gap contract is not in place prior to the loss, the owner would not be able to claim the benefits associated with that coverage.

This requirement ensures that the owner has taken the necessary steps to protect their financial interest before an unexpected event, such as theft or an accident, occurs. Without this contract, the consumer would not be able to recover the gap amount, leading to potential financial hardship in situations where they owe more on the vehicle than it is worth. The continuity of coverage is crucial for the effectiveness of the gap insurance provision.