The Best Gap Insurance Companies

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When it comes to protecting your car, insurance is a vital aspect that ensures that you are covered in case of an accident. However, what happens when your car’s value depreciates fast, and you still owe more than what it’s worth in the market? This is where gap insurance comes in handy. Gap insurance pays the difference between the car’s value and the amount you owe on it, in case of an accident. In this article, we’ll explore some of the best gap insurance companies that you can consider.

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What is Gap Insurance?

Gap insurance is insurance that covers the difference between what you owe on your car loan and what the car is actually worth. It is also known as Guaranteed Asset Protection Insurance. It comes into play when your car is stolen or totaled, and your primary insurance company only pays out its current value, which might not be enough to cover your outstanding loan amount. Without gap insurance, you would have to pay the difference out of your pocket.

How does Gap Insurance Work?

Let’s say you bought a car for $30,000 and took out a loan of $25,000. A year later, the car’s value has depreciated to $20,000. Unfortunately, the car is stolen, and your insurance company only pays the current market value of the car, which is $20,000. Without gap insurance, you would still owe $5,000 to your lender. However, if you have gap insurance, the insurance company pays the $5,000 on your behalf.

The Best Gap Insurance Companies

Now that we’ve established the importance of gap insurance, let’s explore some of the best gap insurance companies in the market:

1. Progressive

Progressive is a well-known insurance company that provides gap insurance to its clients. Its coverage is known as “loan/lease payoff” coverage, and it comes as part of its collision and comprehensive coverage. It is easy to add the coverage to your existing policy, and you can also customize the coverage to suit your needs.

Pros

  • Low premiums
  • Easy to add to your existing policy
  • Customizable coverage

Cons

  • Not available in all states

2. Allstate

Allstate is another popular insurance company that provides gap insurance coverage to its clients. Its coverage is known as “new car replacement,” and it covers the difference between what you owe on the car and the car’s current value, up to $50,000. It is available as part of its collision and comprehensive coverage.

Pros

  • Covers up to $50,000
  • Easy to add to your existing policy
  • No deductible

Cons

  • Premiums may be higher than other insurers

3. Nationwide

Nationwide is a reputable insurance company that provides gap insurance to its clients. Its coverage is called “loan/lease payoff,” and it covers the difference between what you owe on the car and the car’s value, up to 25% of the car’s actual cash value. It is available as part of its collision and comprehensive coverage.

Pros

  • Covers up to 25% of the car’s actual cash value
  • Easy to add to your existing policy
  • Customizable coverage

Cons

  • Premiums may be higher than other insurers

What to Look for When Choosing a Gap Insurance Company

When choosing a gap insurance company, there are a few things that you need to keep in mind:

Premiums

Look for a company that offers affordable premiums. Remember, gap insurance is an add-on to your primary insurance coverage, so you don’t want it to break the bank.

Coverage

Look for a company that provides comprehensive coverage that suits your needs. You want a company that covers the difference between what you owe on the car and the car’s market value.

Customizability

Look for a company that allows you to customize your coverage according to your needs. This way, you can tailor your coverage to suit your individual needs.

Frequently Asked Questions

1. Is gap insurance necessary?

While it is not a legal requirement, gap insurance is highly recommended, especially if you have a car loan or lease. It protects you from paying out of pocket in case of an accident.

2. Can I still get gap insurance if my car is not new?

Yes, you can still get gap insurance if your car is not new. However, some insurers may place restrictions on the car’s age and mileage.

3. Can I cancel my gap insurance policy?

Yes, you can cancel your gap insurance policy. However, you may not be entitled to a refund of your premiums.

Conclusion

Gap insurance is an essential coverage that can save you from paying out of pocket in case of an accident. When choosing a gap insurance company, consider premiums, coverage, and customizability. Some of the best gap insurance companies in the market include Progressive, Allstate, and Nationwide.

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