What Is Gap Insurance and Why You Might Need It
If you’ve ever purchased a new car, you may have been offered gap insurance. But what exactly is gap insurance, and is it something you really need? Here’s what you need to know about this type of insurance coverage.
What Is Gap Insurance?
Gap insurance, also known as guaranteed asset protection insurance, is a type of coverage that helps cover the “gap” between what you owe on your car loan and the actual value of your car. If your car is totaled or stolen, your regular insurance policy will only cover the actual cash value of your car, which may be less than what you owe on your loan. Gap insurance can help cover this difference, so you’re not left with a big bill to pay out of pocket.
Who Needs Gap Insurance?
Gap insurance is most commonly recommended for people who are financing a car, as it can help protect them from financial loss if their car is totaled or stolen. If you owe more on your car loan than your car is worth, gap insurance can help ensure that you don’t end up owing money on a car that you no longer have.
However, gap insurance may not be necessary for everyone. If you paid for your car in full, or if you owe less on your car loan than your car is worth, you may not need gap insurance. It’s always a good idea to check with your insurance provider to see if gap insurance is right for you.
FAQs About Gap Insurance
Here are some common questions and answers about gap insurance:
Q: Can I purchase gap insurance from any insurance company? A: Yes, many insurance companies offer gap insurance as an add-on to their regular auto insurance policies.
Q: Can I purchase gap insurance after I’ve already purchased my car? A: Yes, you can often purchase gap insurance after you’ve already purchased your car. Check with your insurance provider for details.
Q: How much does gap insurance cost? A: The cost of gap insurance varies depending on your insurance provider and the value of your car. However, it’s typically inexpensive, costing just a few hundred dollars a year.
Best Companies for Gap Insurance
Here are five of the best companies for gap insurance, along with links to their websites, where you can learn more about their coverage options and pricing:
- State Farm: State Farm is one of the largest insurance providers in the United States and offers gap insurance as an add-on to their auto insurance policies.
Link: https://www.statefarm.com/
- Allstate: Allstate is another well-known insurance provider that offers gap insurance as an add-on to their auto insurance policies.
Link: https://www.allstate.com/
- Nationwide: Nationwide offers a range of auto insurance options, including gap insurance, which can be added to their regular policies.
Link: https://www.nationwide.com/
- Geico: Geico is known for their affordable rates and offers gap insurance as an add-on to their auto insurance policies.
Link: https://www.geico.com/
- Progressive: Progressive is another top insurance provider that offers gap insurance as an add-on to their auto insurance policies.
Link: https://www.progressive.com/
Before choosing a gap insurance provider, be sure to compare rates and coverage options to find the best policy for your needs and budget.