Insurance Gap Coverage – How Much Does Insurance Gap Coverage Cost

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Insurance gap coverage is an optional kind of auto insurance that protects leased or financed vehicles financially by paying the difference between what you owe on your loan and the car’s depreciated value if it is totaled.

This optional coverage aids drivers whose auto loan balance exceeds the value of their vehicle in the event of a total loss by filling in the financial gap. Another name for it is loan/lease gap coverage.

It is only useful in certain circumstances and is not mandated by law. But in those cases, if your car is deemed a total loss, it can prevent your bank account from being completely depleted.

How Does Insurance Gap Coverage Work?

One kind of auto insurance that is commonly acquired for financed or leased vehicles is gap insurance. Your typical auto insurance policy will pay you back for your car’s current value if it is totaled.

However, this amount may be less than what you still owe on the loan. That difference would be covered by this insurance. You must file an auto insurance claim in the event of a total loss before filing a gap insurance claim.

How Much Does Insurance Gap Coverage Cost?

It costs an average of $61 annually. Using an auto insurance provider is far less expensive than going through a car dealership.

Top Insurance Companies That Sell Gap Insurance

Many car insurance companies that offer this policy include:

  • Allstate.
  • American Family.
  • Auto-Owners.
  • Erie.
  • Nationwide.
  • Progressive.
  • Shelter.
  • State Auto.
  • Travelers.
  • Westfield.

It may not be offered by all auto insurance providers and may not be accessible in all states.

What Does Gap Insurance Cover?

If your car is declared a total loss, gap insurance is meant to pay the difference between the remaining amount on your loan and the vehicle’s depreciated value.

Only when your regular auto insurance settles for the current market value, which might not be enough to pay off your entire loan, does it kick in.

What Is Not Covered by Gap Insurance?

The following are not covered by this policy:

  • Car repair costs.
  • The price of a rental car while your vehicle is being repaired.
  • Damage to another person’s property.
  • Injuries.
  • Your deductible on auto insurance.
  • Late fees and overdue payments on your car loan or lease.
  • Security deposits.
  • Extended warranties.
  • Balances carried over from previous leases or loans.
  • Lease penalties for high mileage or excessive use.
  • Fees associated with the loan for credit insurance.

As well as a down payment for a new car.

When Do I Need Insurance Gap Coverage?

Here are a few scenarios where gap insurance might be necessary:

  • Having more debt than the worth of your car.
  • If standard coverage for a totaled car is less than the outstanding loan balance.
  • If you are leasing a vehicle.
  • If you purchased a new car with a smaller down payment

In addition, having a longer financing term for your vehicle.

Where Can I Buy Insurance Gap Coverage?

Generally, you can buy this policy from:

  • Car insurance companies.
  • Car dealerships.

As well as banks and credit unions.

How to get Insurance Gap Coverage Online

Here’s how to obtain this coverage if you are interested in having it:

  • Visit the insurance provider’s webpage for instance Allstate’s vehicle protection page at https://vehicleprotection.allstate.com/
  • Navigate to the “GAP” option on the homepage.
  • Ensure to meet the eligibility requirements as it is usually offered for both new and used cars, but you have to add it when financing the car.

Then begin the process by submitting the required paperwork online.

Frequently Asked Questions

Here are some frequently asked questions.

What Does GAP Stand for?

GAP is the acronym for Guaranteed Asset Protection.

Is Gap Insurance Worth It?

If you owe a lot more on your auto loan or lease than the car is worth, gap insurance might be worth the relatively small cost.

Does Gap Insurance Cover Your Deductible?

No. When you buy this policy through an auto insurance company, your collision, and comprehensive deductible amounts are typically not covered.

Does Gap Insurance Cover Engine Failure?

No. Engine failure is not covered by gap insurance. Only in the event of a complete loss of your car such as in an accident or theft, will the insurance kick in.

Conclusion

It is only accessible if you are the first owner of a new car on a loan or lease. Although it is very flexible, keep in mind that it only pays for damage to your car and not other items or injuries sustained in an accident.