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At Bankrate, we strive to help you make smarter financial decisions. To help readers understand how insurance affects their finances, we have licensed insurance professionals on staff who have spent a combined 47 years in the auto, home and life insurance industries. While we adhere to strict editorial integrity, this post may contain references to products from our partners. Here's an explanation of how we make money. Our content is backed by LLC, a licensed entity (NPN: 19966249). For more information, please see our Insurance Disclosure. Bankrate logo The Bankrate promise
Founded in 1976, Bankrate has a long track record of helping people make smart financial choices. We’ve maintained this reputation for over four decades by demystifying the financial decision-making process and giving people confidence in which actions to take next. Bankrate follows a strict , so you can trust that we’re putting your interests first. All of our content is authored by and edited by , who ensure everything we publish is objective, accurate and trustworthy. Our insurance team is composed of agents, data analysts, and customers like you. They focus on the points consumers care about most — price, customer service, policy features and savings opportunities — so you can feel confident about which provider is right for you. We guide you throughout your search and help you understand your coverage options. We provide up-to-date, reliable market information to help you make confident decisions. We reduce industry jargon so you get the clearest form of information possible. All providers discussed on our site are vetted based on the value they provide. And we constantly review our criteria to ensure we’re putting accuracy first. Bankrate logo Editorial integrity
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Coverage.com, LLC is a licensed insurance producer (NPN: 19966249). Coverage.com services are only available in . Coverage.com may not offer insurance coverage in all states or scenarios. All insurance products are governed by the terms in the applicable insurance policy, and all related decisions (such as approval for coverage, premiums, commissions and fees) and policy obligations are the sole responsibility of the underwriting insurer. The information on this site does not modify any insurance policy terms in any way. If your newer vehicle is totaled or stolen, the insurance company will pay out the depreciated value of your vehicle in a covered claim. This depreciated value is determined at the time of the loss and can be less than the amount you owe on your lease or loan. This is where Guaranteed Asset Protection (GAP), or gap insurance, steps in. This optional auto insurance endorsement pays the difference between these two values so that you don’t owe on your loan or lease, even if you no longer have the vehicle. Compare rates and save on auto insurance today! Get quotes Close X RatesRates keep going up in 2022. Compare rates and save on auto insurance today! Get quotes Close X This advertisement is powered by Coverage.com, LLC, a licensed insurance producer (NPN: 19966249) and a corporate affiliate of Bankrate. The offers and links that appear on this advertisement are from companies that compensate Coverage.com in different ways. The compensation received and other factors, such as your location, may impact what offers and links appear, and how, where and in what order they appear. While we seek to provide a wide range of offers, we do not include every product or service that may be available. Our goal is to keep information accurate and timely, but some information may not be current. Your actual offer from an advertiser may be different from the offer on this advertisement. All offers are subject to additional terms and conditions. Compare auto insurance rates
Answer a few questions to see personalized rates from top carriers. Save on auto insurance with quotes from trusted providers like: Drivers switch & save an average of $750+/year Arrow Right Are you overpaying for auto insurance? Arrow Right Safe drivers choose Allstate Arrow Right Powered by Coverage.com (NPN: 19966249) Coverage.com, LLC is a licensed insurance producer (NPN: 19966249). Coverage.com services are only available in . Coverage.com may not offer insurance coverage in all states or scenarios. All insurance products are governed by the terms in the applicable insurance policy, and all related decisions (such as approval for coverage, premiums, commissions and fees) and policy obligations are the sole responsibility of the underwriting insurer. The information on this site does not modify any insurance policy terms in any way. See more providers in Choose from insurers in Show More RATE INCREASE ALERT Rates increased up to 12% this year
Shop for a better rate before you renew your current policy. This advertisement is powered by Coverage.com, LLC, a licensed insurance producer (NPN: 19966249) and a corporate affiliate of Bankrate. The offers and links that appear on this advertisement are from companies that compensate Coverage.com in different ways. The compensation received and other factors, such as your location, may impact what offers and links appear, and how, where and in what order they appear. While we seek to provide a wide range of offers, we do not include every product or service that may be available. Our goal is to keep information accurate and timely, but some information may not be current. Your actual offer from an advertiser may be different from the offer on this advertisement. All offers are subject to additional terms and conditions. Compare auto insurance rates
Answer a few questions to see personalized rates from top carriers. Save on auto insurance with quotes from trusted providers like: Drivers switch & save an average of $750+/year Arrow Right Are you overpaying for auto insurance? Arrow Right Safe drivers choose Allstate Arrow Right Powered by Coverage.com (NPN: 19966249) Coverage.com, LLC is a licensed insurance producer (NPN: 19966249). Coverage.com services are only available in . Coverage.com may not offer insurance coverage in all states or scenarios. All insurance products are governed by the terms in the applicable insurance policy, and all related decisions (such as approval for coverage, premiums, commissions and fees) and policy obligations are the sole responsibility of the underwriting insurer. The information on this site does not modify any insurance policy terms in any way. See more providers in Choose from insurers in Show More What is gap insurance
Gap insurance is optional car insurance coverage that covers the “gap” between the amount owed on a vehicle and its actual cash value (ACV) in the event it is totaled or stolen from a covered claim. If you are planning on leasing or buying a car or have already done so, you may be wondering if you should buy gap insurance, or possibly where to buy gap insurance. Gap insurance is typically an optional coverage for drivers, but in some cases your loan or lease contract may require it. But, what is gap insurance? Say you have been involved in an accident and your vehicle has been damaged beyond repair and must be replaced. You still owe $18,000 on your auto loan but the vehicle is now worth only $15,000. Gap insurance would cover the $3,000 difference between what you owe on your car and its current market value, after accounting for deductibles. Some policies also cover the deductible. Remember that gap insurance typically applies only to vehicles that are brand new, or models less than a year old, that have been totaled or stolen. It does not cover accidents, damages, repairs or a sale or trade-off, even if the financed amount is higher than the value of the vehicle. It will also not help buy you another vehicle — you would need new car replacement coverage to cover the expenses of a new vehicle. Auto Car Guides Looking to save money on auto insurance
Compare rates & save Compare rates & save ADVERTISEMENT Get my free quote Powered by Coverage.com (NPN: 19966249) This advertisement is powered by Coverage.com, LLC, a licensed insurance producer (NPN: 19966249) and a corporate affiliate of Bankrate. The offers and links that appear on this advertisement are from companies that compensate Coverage.com in different ways. The compensation received and other factors, such as your location, may impact what offers and links appear, and how, where and in what order they appear. While we seek to provide a wide range of offers, we do not include every product or service that may be available. Our goal is to keep information accurate and timely, but some information may not be current. Your actual offer from an advertiser may be different from the offer on this advertisement. All offers are subject to additional terms and conditions. Coverage.com, LLC is a licensed insurance producer (NPN: 19966249). Coverage.com services are only available in . Coverage.com may not offer insurance coverage in all states or scenarios. All insurance products are governed by the terms in the applicable insurance policy, and all related decisions (such as approval for coverage, premiums, commissions and fees) and policy obligations are the sole responsibility of the underwriting insurer. The information on this site does not modify any insurance policy terms in any way. How much is gap insurance
You can get gap insurance from a few places — primarily the dealership or lender that is financing your car, or directly from an auto insurance provider. Gap coverage is typically more expensive if you get it from the dealership or lender versus adding it to your . That said, a few factors may impact your gap insurance . Your insurer will likely consider several factors, including your vehicle’s actual cash value (ACV), geographic location, age and . Ask your auto insurer if it offers gap insurance and how much it would cost based on your situation to understand if gap insurance is the right financial protection for you. Where to buy gap insurance
Some auto insurers, like , do not offer gap insurance, while others vary in how this protection is offered and how it works. Here’s a quick look at a few options: : The largest auto insurer in the U.S., State Farm does not offer gap insurance but has . Payoff Protector is available with every loan from State Farm Bank, and if certain criteria are met, this feature can pay off the difference between your vehicle’s depreciated value and your remaining loan balance. : The waives the difference between a primary auto insurance settlement and the outstanding balance owed on a vehicle. It waives covered losses up to $50,000 and reimburses a deductible payment up to $1,000. : Progressive caps at 25% of the vehicle’s actual cash value. : Nationwide offers gap insurance but does not waive your deductible if you file a claim, so be mindful of whether your deductible is low enough that you can afford it in case of a total loss. : AAA offers gap coverage for vehicles that are fully covered, including optional comprehensive and collision insurance. : Esurance (and some other auto insurers) refers to gap insurance as auto loan and lease coverage. You may qualify for coverage if you are leasing or paying off a financed vehicle and have full-coverage insurance. : USAA auto insurance is available to active military, veterans and their immediate families. USAA offers , which includes an extra 20% above the vehicle’s actual cash value if it is totaled. Is gap insurance worth it
Gap insurance is generally recommended by lenders or for new vehicles when or if: The has a length of five years or longer Loan has a high-interest rate because the principal on the vehicle will take longer to pay down versus the depreciation You paid a low down payment It is generally recommended to compare what you will pay for your car over the life of your financing to the car’s MSRP or agreed-upon sales price and see if you have a gap from the start. In the event you do, gap insurance may be a good idea. Keep in mind your “gap cost” is always fluctuating. Generally, the difference between what you owe and what the vehicle’s worth shrinks as you make monthly payments and as the car depreciates. Other situations in which gap insurance might not be necessary include: When there was a large down payment If the initial loan term was short, say three years or less. You can cancel the coverage at any time — typically recommended only once the amount owed on the vehicle is less than its market value. If you are unsure of whether gap insurance is worth it, consider the cost to risk. Gap insurance is fairly inexpensive and, in many cases, can be added to your existing full-coverage policy for a nominal cost per year. That may be far less than the difference between your car’s value and what you owe in case of a major accident. Gap insurance for leased cars
Like any car or SUV, leased vehicles depreciate quickly. Therefore, if you did not put much money down and still owe a sizable amount on your total lease payment, you will likely owe more than the vehicle is worth if you get into an accident. In this situation, gap insurance coverage for your lease might be a smart financial decision. As with a purchased car, it may help you to compare your total cost — including taxes and anything else you rolled into the lease — to the vehicle’s MSRP to determine if you have a gap. And just like a purchased vehicle, the difference between what you owe and what the car’s worth decreases as you make monthly payments and as the car depreciates. This means you may not need the coverage for your entire lease period. You may only need it for a few months, depending on your lease agreement. Auto Car Guides Looking to save money on auto insurance
Compare rates & save Compare rates & save ADVERTISEMENT Get my free quote Powered by Coverage.com (NPN: 19966249) This advertisement is powered by Coverage.com, LLC, a licensed insurance producer (NPN: 19966249) and a corporate affiliate of Bankrate. The offers and links that appear on this advertisement are from companies that compensate Coverage.com in different ways. The compensation received and other factors, such as your location, may impact what offers and links appear, and how, where and in what order they appear. While we seek to provide a wide range of offers, we do not include every product or service that may be available. Our goal is to keep information accurate and timely, but some information may not be current. Your actual offer from an advertiser may be different from the offer on this advertisement. All offers are subject to additional terms and conditions. Coverage.com, LLC is a licensed insurance producer (NPN: 19966249). Coverage.com services are only available in . Coverage.com may not offer insurance coverage in all states or scenarios. All insurance products are governed by the terms in the applicable insurance policy, and all related decisions (such as approval for coverage, premiums, commissions and fees) and policy obligations are the sole responsibility of the underwriting insurer. The information on this site does not modify any insurance policy terms in any way. Frequently asked questions
How do I get the best deal on gap insurance
You have a few options for where to buy gap insurance: through the dealership, a standard auto insurer or a specialty gap insurance company. A gap insurance policy through dealerships can be too expensive to make sense for some drivers, although it can be a convenient option. Shop around between the dealership, auto insurers and companies that specialize in gap insurance; your best deal may come from your existing car insurance carrier. If you already have full coverage, you may be able to add gap insurance for a marginal annual cost.
Do you get money back from gap insurance
If you pay a vehicle loan off in full early, you may be entitled to a refund of the unused portion of your gap insurance. Some states require insurers to refund the premiums if, for example, a 36-month loan with gap coverage for 36 months is paid in 24 months. In some cases, an insurer may not let you know if you are due a refund. Make sure to keep your payoff letter, the original contract or insurance information and an odometer disclosure statement. It is important to know an insurer’s refund policy before buying gap insurance. It could be helpful to contact your state commerce department or insurance commissioner’s office to learn about your state’s regulations beforehand or what to do if your insurer refuses to issue a refund.
How does gap insurance work if your car is totaled
Gap insurance only provides financial protection for the gap between the actual cash value of a vehicle at the time of a and the current amount still owed on an auto loan. Total loss can vary by state law and/or by the insurance provider.
Do I need gap insurance if I have full coverage
While you might feel like your auto insurance coverage is robust, auto insurers typically do not offer any one policy called “” that is designed to protect you against every possibility. Instead, you can get more protection by layering (e.g., liability, collision, comprehensive) together. Adding gap insurance to existing coverage can be an excellent way for some drivers to have greater peace of mind. However, coverage needs and benefits will vary widely by driver. SHARE: Cynthia Widmayer is an insurance contributor for Bankrate and has over two years of experience as a personal finance writer. She covers home, car and life insurance products for Bankrate, The Simple Dollar and Coverage.com among others. Amy Sims is a managing editor for Bankrate, leading a team responsible for creating educational insurance content. Mark Friedlander is director of corporate communications at III, a nonprofit organization focused on providing consumers with a better understanding of insurance. Related Articles