Does Gap Insurance Cover Theft?

If you’re financing or leasing a car, chances are that you’ve heard of gap insurance. Gap insurance is designed to cover the “gap” between the value of your car and the amount you owe on your car loan or lease. But what happens if your car is stolen? Does gap insurance cover theft? In this article, we’ll explore the answer to this question in depth.

What is Gap Insurance?

Before we dive into whether or not gap insurance covers theft, let’s quickly review what gap insurance is and how it works. Gap insurance is a type of car insurance that is designed to cover the difference between the actual cash value of your car and the balance of your car loan or lease if your car is totaled or stolen. Essentially, it’s a way to protect yourself from owing more money on your car than it’s worth in the event of an accident or theft.

Gap insurance is typically offered by car dealerships, banks, and insurance companies. It’s important to note that gap insurance is not required by law, but it may be required by your lender or leasing company.

Does Gap Insurance Cover Theft?

Now, let’s answer the big question: does gap insurance cover theft? The short answer is yes, gap insurance can cover theft in some cases. However, it depends on the specifics of your policy and the circumstances surrounding the theft.

Most gap insurance policies will cover theft as long as you’ve taken the proper precautions to protect your car. This typically means that you need to have comprehensive insurance coverage, which covers theft, vandalism, and other non-collision related damage.

Additionally, most gap insurance policies will require you to file a police report and cooperate with the authorities in their investigation of the theft. You’ll also need to provide documentation of your car loan or lease, as well as proof of your comprehensive insurance coverage.

What Does Gap Insurance Cover in the Event of Theft?

If your car is stolen and your gap insurance policy covers theft, what can you expect to be covered? Here’s a breakdown:

FAQ About Gap Insurance and Theft Coverage

Q: Is gap insurance required if I have comprehensive insurance coverage?

A: No, gap insurance is not required by law if you have comprehensive insurance coverage. However, it may be required by your lender or leasing company.

Q: What should I do if my car is stolen?

A: If your car is stolen, you should file a police report immediately and contact your comprehensive insurance company. You should also contact your gap insurance provider to determine if your policy covers theft and what documentation you’ll need to provide.

Q: Will gap insurance cover theft if I didn’t have comprehensive insurance coverage at the time of the theft?

A: No, most gap insurance policies require you to have comprehensive insurance coverage in order to cover theft. If you didn’t have comprehensive coverage at the time of the theft, your gap insurance policy likely won’t cover the theft.

Q: What should I do if my gap insurance claim is denied?

A: If your gap insurance claim is denied, you should review your policy and contact your gap insurance provider to determine the reason for the denial. If you believe the denial is unjustified, you may want to contact an attorney or file a complaint with your state’s insurance commissioner.

Q: How much does gap insurance cost?

A: The cost of gap insurance varies depending on several factors, including the value of your car, the length of your car loan or lease, and the amount of coverage you choose. On average, gap insurance costs around $20-$30 per year.

Conclusion

In conclusion, gap insurance can cover theft in some cases, but it depends on the specifics of your policy and the circumstances surrounding the theft. If you’re concerned about the possibility of theft or total loss of your car, it’s worth considering purchasing gap insurance to protect yourself from owing more money on your car than it’s worth. As always, it’s important to review your policy carefully and ask any questions you may have before purchasing gap insurance.