Find The Best GAP Insurance For Your Vehicle

GAP insurance helps pay your loan off when your car is stolen or totaled while still in debt. Learn to find the best GAP insurance for your car today.

Even when you protect yourself, moments arise when you need additional help. What is GAP insurance? GAP insurance provides an additional level of auto coverage protection when your vehicle is stolen or totaled before you fully pay off your car loan. The difference between the money you still owe on the loan and the vehicle’s depreciated value is referred to as the “gap.”

What does GAP insurance cover? What insurance provides offer the cheapest GAP insurance? Are certain GAP coverage options recommended over others? The best options for GAP insurance offer low premiums and flexible coverage options from insurance companies you trust. Read ahead to learn how to find the best GAP insurance for your vehicle today.

What Is Gap Insurance

Life tends to bring unexpected changes beyond the power to control them. Whether they bring good luck or bad, unforeseen events force people to deal with new circumstances the best they can. 2020 was a prime, yearlong example of the way unprecedented events cause various surprises and hardships. What is GAP insurance? Guaranteed Asset Protection (GAP) insurance is a way to mitigate financial hardships pursuant to auto accidents and auto thefts.

Every U.S. state requires drivers to maintain a minimum level of financial responsibility to cover damages caused in an accident. Minimum liability insurance is required by law across most of the nation. GAP insurance, also referred to loan/lease gap coverage, is an optional coverage policy. It helps you pay difference between what your regular insurance covers and what you owe on your auto loan when your financed or leased vehicle is totaled or stolen.

What Does It Cover

GAP insurance is an optional, supplemental insurance policy paid for either separately or when incorporated into your current auto insurance plan. GAP insurance covers:

• When your financed vehicle is totaled before you pay off your auto loan.

• When your financed vehicle is stolen before you pay off your auto loan (pending certain conditions).

• When a leased vehicle is totaled or stolen prior to you paying the lease off in full (also pending certain conditions). 

Situations covered by GAP insurance policies have specific qualifying conditions attached. For example, for GAP insurance to cover auto theft, your stolen vehicle must never be found/returned or must have damage to such a degree your insurance company deems it a total loss. GAP insurance policies also have deductibles. When your automobile is totaled, your insurance company assesses its cash/fair market value based on damages sustained and other factors. If your auto loan balance is $20,000 and the depreciated value of your totaled vehicle is $19,000, you will be left owing $1,000 to your lender after your insurer pays the $19,000. If you have a $1,000 deductible on your GAP insurance policy you will have to pay the full remaining balance out-of-pocket.

What situations and expenses are not covered by GAP insurance? GAP insurance does not pay for auto repairs or to help you make loan payments due to financial hardship. GAP insurance does not pay for carry-over balances rolled into new car loans or the cost of car rentals when your vehicle is in the shop. Finally, GAP insurance does not pay for extended warranties, down payments or reduced value claims.

What Insurance Providers Offer GAP Insurance

GAP coverage policies are offered by many major U.S. insurance providers in 2021. Some big name companies such as Geico and State Farm do not sell GAP insurance. State Farm offers its proprietary Payoff Protector policy instead. What insurance providers offer GAP insurance in 2021? The following is a list of several insurance companies selling GAP protection coverage today:

• Progressive

• Allstate (video)

• Esurance

• Travelers

• Nationwide

• USAA

• Safeco

• Liberty Mutual

Why Is GAP Insurance Recommended

GAP insurance is recommended for numerous reasons. When your financed car is totaled or stolen it creates financial crisis. For example, not only do you now have the financial responsibly of paying off a car/truck you no longer own, you also have to somehow purchase a new one. What happens to your credit if you cannot make your auto loan payments? Protecting your FICO score is also an important part of your financial future as a consumer. Having your credit score drop suddenly beyond control has a lasting impact on your ability to move ahead in life. GAP insurance is recommended because it helps save you much-needed money, while also protecting your credit rating from taking serious hits.

Cheapest GAP Coverage

The cheapest GAP coverage options are likely to be available through your current insurer. While GAP insurance is sold as a separate policy through various outlets, your current insurance company might be able to wrap the cost into the premiums you are already paying. Some insurance companies charge only $5-$20 more per year when you purchase GAP insurance as part of a bundle coverage plan.

Best Options

As with all insurance plans, the best options for GAP insurance coverage offer the lowest premiums, lowest deductibles and highest payouts. The best option for you is likely to purchase GAP insurance through your current insurer. Auto insurance companies offer loyalty and bundle discounts as incentive to keep your business. Bundling numerous coverages or wrapping GAP coverage into your current plan might only increase your annual premiums by $20 each year. 

GAP insurance is also available through car dealerships, banks, credit unions and more. Your dealer might attempt to sell GAP insurance to you at prices significantly higher than your insurance company does. The best GAP insurance options are often with the insurance company you already have.