Who Offers Gap Insurance?

If you’re buying a new car or leasing one, it’s important to consider purchasing gap insurance. Gap insurance, also known as “guaranteed asset protection insurance,” covers the difference between what you owe on your car and what it’s worth if it’s totaled or stolen. This type of coverage can be especially helpful if you owe more on your car than its current market value.

What is Gap Insurance?

Gap insurance helps to close the gap between what you owe on your car and what it’s worth if it’s declared a total loss by your insurance company. Without gap insurance, you may be responsible for paying off the remaining balance on your car loan or lease even if your car is no longer drivable.

Most comprehensive car insurance policies cover the market value of your car, which is often less than what you owe on your car loan. This is because your car starts to depreciate as soon as you drive it off the lot.

For example, you might owe $20,000 on your car loan, but if your car is totaled, it’s only worth $15,000. Without gap insurance, you would be responsible for paying the remaining $5,000 balance on your loan.

Who Offers Gap Insurance?

Gap insurance is typically offered by car dealerships and insurance companies. If you’re buying a new or used car, the dealership may offer gap insurance as an add-on to your car loan or lease agreement.

If you’re looking for gap insurance on your current car, your current insurance provider may offer it as an add-on to your policy. You may also be able to purchase gap insurance from a third-party provider.

It’s important to shop around and compare rates for gap insurance. Prices and coverage can vary depending on the coverage limits and deductibles you choose, as well as the provider you choose.

How Does Gap Insurance Work?

Gap insurance typically pays the difference between what you owe on your car loan or lease and what your car is worth at the time of the accident or theft. This amount can vary depending on your policy and the coverage you choose.

When you purchase gap insurance, your insurance provider will typically require you to pay a premium. This premium can be added to your car loan or lease payments, or you can pay it in a lump sum.

In the event of a total loss, you may need to provide proof of the actual cash value of your car, as well as the balance owed on your loan or lease. Once your claim is approved, your gap insurance provider will pay the difference between what you owe and what your car is worth.

FAQ About Gap Insurance

What Does Gap Insurance Cover?

Gap insurance covers the difference between what you owe on your car and what it’s worth if it’s declared a total loss by your insurance company. It may also cover additional expenses such as your car insurance deductible or rental car fees.

Is Gap Insurance Required?

Gap insurance is not required by law, but it can be a good option if you owe more on your car than its market value. If you’re financing or leasing a car, your lender may require you to purchase gap insurance as a condition of your loan agreement.

How Much Does Gap Insurance Cost?

The cost of gap insurance can vary depending on the provider you choose, as well as the coverage limits and deductible you select. On average, gap insurance can cost between $20 and $500 per year.

Can You Add Gap Insurance to an Existing Policy?

Yes, many insurance providers offer gap insurance as an add-on to your existing policy. You may also be able to purchase gap insurance from a third-party provider.

How Long Does Gap Insurance Coverage Last?

Gap insurance coverage typically lasts for the length of your car loan or lease agreement. If you pay off your loan early or terminate your lease early, your gap insurance coverage may end early as well.

Conclusion

Gap insurance can be a helpful way to protect yourself if you owe more on your car than its current market value. Whether you’re buying a new car, leasing one, or looking for additional coverage on your current car, it’s important to shop around and compare rates to find the best policy for your needs.