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Top Reasons To Buy Gap Insurance
- Auto Liens
- Gap Eligibility
- Where to Get Gap Insurance
Page OverviewUnlike collision insurance and comprehensive coverage―which only covers what the vehicle is worth, in the event of theft or a total loss accident―gap insurance covers the gap between what the vehicle is worth and what you still owe on the vehicle loan.
For example, if your vehicle is only worth $8,000 at the time it is stolen, but you still owe $9,500 on the auto loan, gap coverage will cover the remaining $1,500.
For this reason, if you lease a car, or if your vehicle is still under lien, you might want to consider purchasing gap insurance.
Auto Liens
An auto lien is essentially the contract you sign when you agree to finance a vehicle. An auto lien document verifies the lender’s hold on the financed vehicle. When you finance a vehicle, you can go about it in several ways, to include the following:
- Put little to no money down, with or without a vehicle trade in.
- Put some money down, with or without a vehicle trade in.
- Put a lot of money down, with or without a vehicle trade in.
If you put little to no money down, or if your vehicle trade in is not worth much, purchasing gap insurance is typically advisable. On the other hand, if you put enough money down that there is likely not to be a gap in what you owe and what the vehicle is worth, you might not require gap coverage.
Gap Eligibility
Gap insurance applies to used cars, new cars, and leased vehicles, with the following exceptions:
- Balances carried over from a prior loan or lease.
- Overdue leases.
- Overdue loan payments.
- Prior damage expenses.
- Extended warranties.
- Equipment installed after the vehicle has left the factory floor.
In other words, you might still be liable for certain out of pocket expenses, even if you have gap coverage. That said, purchasing gap insurance will still reduce the amount you have to pay out of pocket, in the event of a total loss.
Where to Get Gap Insurance
Gap insurance is often offered as part of a lease or loan agreement, but is it typically cheaper to purchase gap coverage from your car insurance company. The actual cost of gap insurance depends on several factors, such as the estimated worth of your vehicle, and the details of the auto lien.
You can compare gap insurance rates online, or by contacting the Insurance Department in your state.
In This Section
Other Topics in This Section
- Top Reasons To Buy Liability Insurance
The Benefits Of Liability Insurance. Many States Require Liability Coverage To Protect Drivers In Auto Accidents. Learn More On Liability Auto Insurance Before Buying A Car Insurance Policy.
- Top Reasons To Buy Bodily Injury Coverage
Bodily Injury Coverage And Personal Injury Protection Info. Find Out If This Car Insurance Coverage Is Worth Adding To Your Auto Insurance Policy Before You Get In An Auto Accident.
- Top Reasons To Buy Property Damage Coverage
Learn The Benefits Of Property Damage Coverage And Physical Damage Protection. Get Car Insurance And Auto Accident Info To Make An Educated Decision When Buying An Auto Insurance Policy.
- Top Reasons To Buy Non Owner Liability Coverage
Learn Who Needs Non Owner Liability Coverage. Find Online Info On Auto Insurance And Liability Insurance Before You Get Behind The Wheel Of A Borrowed Vehicle. Car Insurance Policies Vary.
- Top Reasons To Buy Comprehensive Insurance
Learn The Benefits Of Comprehensive Insurance. Determine If Physical Damage Protection Is A Type Of Car Insurance You Should Buy. Find Auto Insurance Info Online.
- Top Reasons To Buy Collision Insurance
Find The Benefits Of Collision Insurance Online. Get Info On Auto Insurance That Protects You In Case Of An Auto Accident. Learn More On Physical Damage Protection And Car Insurance.
- Top Reasons To Buy Medical Payments Insurance
Get Info On Medical Payments Insurance And Auto Insurance That Covers Personal Injury And Medical Bills. Learn More On Car Insurance That Covers Bodily Injury In An Auto Accident.
- Top Reasons To Buy Rental Reimbursement Insurance
Rental Reimbursement Insurance Info. More On Car Insurance Covering Rental Car Expenses After An Auto Accident. Determine If You Need To Buy Auto Insurance That Pays If You Rent A Car.
- Top Reasons To Buy Uninsured Motorist Insurance
Why It's Smart To Buy Uninsured Motorist Insurance. In The Case Of A Car Wreck With An Uninsured Driver, Uninsured Motorist Coverage Pays For More Expenses Than Regular Auto Insurance.
- Top Reasons To Buy Underinsured Motorist Insurance
Reasons To Buy Underinsured Motorist Insurance. If You Get In A Car Accident With An Underinsured Driver, This Type Of Auto Insurance Covers More Expenses Than Regular Car Insurance.
- Top Reasons To Buy Roadside Assistance Insurance
Info On Roadside Assistance Insurance And Emergency Road Service Coverage. Some Auto Insurance Providers Offer ERS Insurance For Tow Truck Expenses And More.
- Top Reasons To Buy Loan Lease Coverage
Protect An Auto Loan Or Car Lease With Loan Lease Coverage. Look Online For Car Insurance And Auto Lien Info. Some Lenders Require Specific Types Of Auto Insurance Coverage.
- Top Reasons To Buy Hired Auto Insurance
Guide To Hired Auto Insurance And Non Owned Vehicle Liability Insurance. Learn More On Car Insurance Coverage If You Are Involved In An Auto Accident While Driving A Car That Isn't Yours.
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