Best Gap Insurance

If you’ve recently purchased or leased a new vehicle, it’s important to consider gap insurance. Gap insurance is a type of auto insurance that covers the ‘gap’ between the amount you owe on your car and the car’s actual cash value. This coverage can save you from financial ruin if your car is totaled or stolen. In this article, we’ll discuss what gap insurance is, who needs it, and which providers offer the best gap insurance policies.

What is Gap Insurance?

GAP stands for Guaranteed Asset Protection. When you purchase or lease a new car, its value will immediately depreciate. This means that if you are in an accident and your car is deemed to be a total loss, your insurance company will only pay out the actual cash value of the car at the time of the accident. This amount is often less than the amount you owe on your car loan or lease, leaving you with a financial ‘gap’ to cover. Gap insurance covers the difference between the amount you owe and the actual cash value so that you don’t have to pay out of pocket.

Gap insurance is commonly offered at car dealerships, but it can also be purchased from insurance providers. It’s important to note that gap insurance is not required by law, but it can be a wise investment for many car owners.

Who Needs Gap Insurance?

If you’ve purchased or leased a new car and have a loan or lease payment, you are a good candidate for gap insurance. In addition, if you made a small down payment or financed the car for a long period of time, you may find yourself upside down on your loan if the car is totaled. Gap insurance can also be beneficial if you drive a car with high depreciation or if you drive a lot, as this increases the risk of an accident.

What Should You Look for in Gap Insurance?

When shopping for gap insurance, there are a few important factors to consider. First, make sure the policy covers the full cost of the gap between your loan or lease payment and the actual cash value of the car. Some policies may have a cap on how much they will pay. Second, look for a policy that covers you for the entire duration of your loan or lease term. Some policies may only cover you for a certain period of time, leaving you at risk if you have a longer loan or lease term. Finally, consider the reputation and financial stability of the insurance provider. You want to make sure that they will be around to pay out on your claim if you need it.

Top Providers for Gap Insurance

After researching and comparing policies, we’ve found that three insurance providers stand out as the best for gap insurance.

Progressive

Progressive is known for its flexible coverage options, allowing you to customize your policy to fit your needs. Their gap insurance policies are affordable, with rates ranging from $25-$50 per year. Progressive also offers 24/7 customer support and online policy management, making it easy to manage and file claims.

Allstate

Allstate is a popular insurance provider that offers gap insurance as an add-on to their other policies. Bundling your gap insurance with your other policies can save you money in the long run. Allstate’s gap insurance policies are affordable, with rates ranging from $20-$30 per year. Allstate also offers a mobile app for easy policy management and claims filing.

Nationwide

Nationwide offers the widest coverage options for gap insurance, with policies that cover up to 150% of the car’s value. While their policies are more expensive than the other providers, ranging from $350-$700 for a one-time payment, they offer full coverage for the duration of your loan or lease term. Nationwide also has a strong reputation for customer service and financial stability.

Frequently Asked Questions

What types of vehicles are covered by gap insurance?

Gap insurance can be purchased for new and used cars, trucks, and SUVs that are financed or leased.

Can I purchase gap insurance after I’ve already purchased my car?

Yes, you can purchase gap insurance at any time. Keep in mind that if you wait too long, you may have to pay a higher premium.

Will gap insurance cover my deductible?

No, gap insurance does not cover your deductible. It only covers the ‘gap’ between your loan or lease payment and the actual cash value of the car.

What happens if my car is totaled and I don’t have gap insurance?

If you don’t have gap insurance, you will have to pay out of pocket for the difference between the amount you owe on your car and the actual cash value. This can be thousands of dollars and can be financially devastating.

Can I cancel my gap insurance?

Yes, you can cancel your gap insurance at any time. However, if you cancel before the end of your loan or lease term, you may not be refunded the full amount of your premium.

Do I need gap insurance if I have full coverage?

Even if you have full coverage insurance, your insurance company will only pay out the actual cash value of the car, leaving you with a ‘gap’ to cover. Gap insurance can provide added protection and peace of mind.

Conclusion

When purchasing or leasing a new car, gap insurance can be a wise investment for many car owners. It’s important to shop around and compare policies and providers to ensure that you are getting the best coverage for your needs. Remember to look for a policy that covers the full cost of the ‘gap’ and provides coverage for the duration of your loan or lease term. By taking the time to research and invest in gap insurance, you can protect yourself from financial ruin in the event of an accident or theft.