Benjamin Carr worked as a licensed insurance agent at State Farm and Tennant Special Risk. He sold various lines of coverage and informed his clients about their life, health, property/casualty insurance needs.Assessing risks and helping people find the best coverage to suit their needs is a passion of his. He appreciates that insurance was designed to protect people, particularly during times...
Editorial Guidelines: We are a free online resource for anyone interested in learning more about auto insurance. Our goal is to be an objective, third-party resource for everything auto insurance related. We update our site regularly, and all content is reviewed by auto insurance experts.
For older vehicles, the amount you pay for GAP insurance is likely to outweigh the difference between the vehicle value and the amount remaining on the loan if you were to experience a total loss accident.
Another determining factor is the length of your car loan. If you purchase a vehicle that is less than three years old with a loan term greater than 60 months, then GAP insurance could be a wise investment.
Many car insurance companies, such as Allstate and Nationwide, offer GAP insurance. You may also be able to add GAP insurance right onto your current car insurance policy. If not, you may want to shop around for insurance companies that do offer GAP coverage.
Having GAP coverage on a used car may be helpful under the right conditions. GAP coverage is worth considering if your vehicle is three years old or newer, your loan term is more than 60 months, and/or your down payment is less than 20%.
Comprehensive auto insurance is full coverage. It includes collision insurance but also covers every unexpected calamity that can destroy a car, from vandalism to a flood. But it pays the actual cash value of the car, not the price you paid for it or the amount you may still owe on the loan. Gap insurance covers the difference.
Therefore, you need gap insurance if there is indeed a gap between what you owe and what the car is worth on a used-car lot. That is most likely to occur in the first couple of years of ownership, while your new car is depreciating faster than your loan balance is shrinking. You can cancel the gap insurance once your loan balance is low enough to be covered in full by a collision insurance payment.
Think of it as a supplemental insurance policy for your car loan. If your car is wrecked, and your comprehensive auto insurance policy pays less than you owe the lender, then the gap policy will make up the difference.
Sometimes. Your best bet is to call your auto insurance company and ask whether you can add it to your existing policy. Your insurer should be able to tell you what your options are and how much adding gap coverage may cost. Be sure to compare the best car insurance rates to find the right option.
The cost of gap insurance can vary but is usually inexpensive. If you buy gap insurance from the dealership, it can cost hundreds of dollars a year. If you add gap coverage to a car insurance policy that already includes collision and comprehensive insurance, it typically increases your premium by around $40 to $60 per year.
Gap insurance can come in handy when you buy a new car to cover the difference between its value and what you owe on the loan in the case of a total loss. If your lender requires it, check if you can get it from your insurance company before using the dealer.
USAA offers gap coverage as well as auto replacement assistance. Like gap coverage, auto replacement assistance kicks in after your vehicle has been totaled. This car insurance coverage will help to pay for the cost of a replacement vehicle that is similar to or newer than your wrecked vehicle.
Gap insurance is something you purchase in addition to a full coverage policy. Full coverage usually encompasses liability insurance, collision insurance and comprehensive insurance. You may want gap insurance if your vehicle is financed, especially if you only made a small down payment when you purchased your car.
You may not be able to buy gap insurance at any time. Older vehicles are typically not eligible for gap insurance coverage. Specific requirements vary by insurer, but usually, any vehicle more than three model years old is not eligible for gap insurance coverage.
Gap insurance does not cover theft. It only pays when your vehicle is totaled and you owe money on the loan. However, comprehensive insurance does cover theft, and lenders require comprehensive coverage on cars with auto loans.
Because consumers rely on us to provide objective and accurate information, we created a comprehensive rating system to formulate our rankings of the best car insurance companies. We collected data on dozens of auto insurance providers to grade the companies on a wide range of ranking factors. The end result was an overall rating for each provider, with the insurers that scored the most points topping the list.
If the insurance company gives you less for your car than you still owe, then the lender would not receive their full amount from this payment alone. Without gap insurance, you have to pay your lender the difference. If you have gap insurance, the insurance pays for this difference.
As a note, if you are in an accident and your car is totaled when your car is worth more than the amount you owe, you get to keep the difference. The insurance company will directly pay your lender until they receive all of the money you still owe them. Then, the rest of the money goes to you.
Whether you choose to get gap coverage from the same company that you use for your other insurance policies, looking for the best deals on auto insurance makes sense. After all, saving money on your regular car insurance makes it easier to afford gap insurance.
Yes, you should still get gap insurance if you have full coverage. Full coverage auto insurance includes liability coverage, collision insurance and comprehensive insurance. This does not include gap insurance.
The Detroit Bureau collects data from every major car insurance provider to formulate rankings of the best insurers. Our in-depth rating system takes into account market share, coverage, auto insurance rate estimates generated by Quadrant Information Services, customer satisfaction and ratings from industry experts. Each insurer is given a weighted score in four categories, as well as an overall score out of 10.0.
If you're paying off a car loan, it's possible that your car is worth less than what you owe on your loan. This is also known as being \"underwater\" or having negative equity. Being underwater on your car loan typically means that if your car is totaled or stolen, standard insurance will only cover the value of the car, not your full loan payoff amount.
But that's not the case when you have guaranteed asset protection, or gap, insurance. With gap insurance, the money to pay off your outstanding loan balance comes from your insurer, and not out of your pocket.
Some insurers may also require you to purchase collision and comprehensive coverage before getting gap coverage. If your car is used, or you aren't the original owner, you typically won't be able to buy gap insurance at all.Should You Buy Gap InsuranceGap insurance is worth looking into if the amount you owe on your loan is higher than your car's value, or you're worried that may happen. You're likely to go underwater if any of the following scenarios applies to you:
Regardless of the cause of your negative equity, gap coverage is probably worth purchasing if you can't afford to pay back the difference between your loan amount and your car's value. The insurance is unlikely to make a big dent in your pocketbook (policies can be had for as little as $20 per year, according to the Insurance Information Institute), but they can save you a bundle if you end up needing the coverage.Where Can You Buy Gap InsuranceBefore you start hunting for a quote, check to see if gap coverage was included in your financing. This is likely to be the case if you leased your vehicle.
If your financing didn't include coverage, the easiest way to buy it is through your current auto insurer. You can start by contacting the company to request a quote on the additional insurance coverage. Adding gap insurance to your policy is generally very affordable, and shouldn't be too much of a hassle to add to your policy.
If gap insurance isn't available through your current insurer, you may want to consider switching companies or going another route. Several nationwide and online insurance companies offer gap coverage, including Progressive, which charges an average of $5 per month, or $60 per year. You can also go through a dealership, but you could end up paying a price on the higher end of the spectrum.Saving Money on InsuranceShopping around for the best quote can save you money on insurance coverage, and so can working on your credit. In many states, insurers are allowed to consider your credit when deciding to take you on as a customer and when deciding your rates. Where it's considered as a factor, better credit can help you nab lower premiums.
If you're not sure what condition your credit is in, consider pulling your free credit report and scores before contacting your insurance company. Taking the extra step to improve your scores could ultimately save you money on your car insurance premiums, not just gap insurance. 59ce067264