Gap insurance is an optional part of your auto insurance policy. When you buy a new car, your insurance coverage needs to be a top priority. Your comprehensive coverage is changeable by you, but the gap insurance picks up where it leaves off; when the amount you owe on a car is more than what an insurance company would give you for that car in the circumstance of a total loss, gap insurance covers the difference, or gap, between the two numbers.
Protecting yourself and your vehicle with gap insurance saves you more money down the road than if you did not select the proper coverage. Some companies that offer gap insurance include Nationwide, AllState and Progressive.
Gap Insurance: What to Look For
As you skim through different providers, you'll notice that gap insurance includes the same type of coverage between each insurance company, so it's important to know your chosen company is a reputable one. It's also helpful to know what other coverages the company offers so you have the option of bundling to save more money. Though the coverage is similar, some of the companies have different policies on the amount of coverage and what types of vehicles they cover. Below are a few things to consider when looking for gap insurance.
Length of Establishment
Each insurance company has been around for a different amount of time. Though the time that it has been around is not necessarily the indicator for the ideal gap insurance coverage, it does show which trusted companies have staying power.
Other Coverage Offered
Along with gap insurance, most insurance providers offer many other coverages. Some can be bundled with your auto insurance to qualify for a discount or to keep all of your coverage with one company. Other coverages include motorcycle insurance, boat insurance, motorhome insurance, snowmobile/ATV insurance, home and renter's insurance, insurance for your place of business, life insurance, retirement insurance, and supplemental health insurance.
Amount of Coverage
The majority of the companies' gap insurance coverage is for the amount that vehicle is worth minus the amount that is still due on the vehicle. However, several of the companies only cover up to 25 percent of your car's total value. The coverage kicks in when your vehicle is declared a total loss.
In most instances, this type of coverage applies to new vehicles that still have a balance owed on them at the dealership. Sometimes, the dealership itself even offers the coverage with your purchase. However, some companies put stipulations on the new purchase. One requires that the vehicle be six years old or less. Others are restricted to specific states or require that the purchase was fairly recent.
Gap insurance is beneficial insurance to have when you purchase a new vehicle and want to make sure it has the most protection possible as you take it out on the road. Look through the various companies that offer this coverage to keep your and your family's finances safe in the event of an accident.
21st Century Review
21st Century Insurance offers gap insurance to provide additional protection to new and leased cars. This additional coverage protects your investment in the event that your car is stolen and declared a total loss or damaged beyond repair in an accident.
How does gap insurance work? Gap coverage pays the difference between the value of your car and the amount remaining on your lease or loan. If you have gap coverage and your car is totaled or stolen, your insurance company will cover the total balance on your lease or loan (minus your deductible). Without this additional coverage, you will still owe the bank the difference between the market value of your car and what you owe. For new cars, this can add up to a lot of money since cars depreciate quickly.
21st Century offers gap coverage to drivers in 13 states including Arizona, Colorado, Iowa, Idaho, Kentucky, Montana, New Mexico, Nebraska, Oregon, Tennessee, Utah, Washington and Wisconsin. Adding gap insurance to your policy is recommended if you have a large gap between the value of your vehicle and the balance of your lease or loan. This gap could be significant if your down payment was less than 20 percent, if your car is financed for more than 72 months, or if you drive a sports or luxury car.
21st Century has a long history. It was founded in 1958 and has been providing insurance services for more than 50 years. Today, it is part of the Farmers Insurance Group of Companies. Farmers Insurance has over 50,000 exclusive and independent agents and serves more than 10 million households across the United States.
The company also offers a wide range of insurance products, including flood, auto breakdown, motorcycle, recreational vehicle, homeowners, renters, mobile homes, specialty homeowners, antique auto, boaters, personal umbrella, personal watercraft and life. You can contact any of its numerous agents for a gap insurance quote or additional information about the coverage.
21st Century Insurance is a longstanding insurance company that offers a wide range of insurance coverages, including gap insurance. Purchasing additional gap coverage is a good choice for drivers with a significant gap between the value of their vehicle and the balance on their loan or lease. Since the company also offers a wide variety of insurance policies, you can purchase all your insurance from one company instead of having policies with multiple insurance companies. Unfortunately, the additional gap coverage is only available in 13 states.
Based in Northfield Township, Illinois, AllState Corporation is the third largest insurer for personal lines in the United States. Established in 1931, the company offers insurance for a variety of vehicles. The company also has homeowners, pet, life, flood and many other forms of insurance.
AllState's gap insurance helps you steer clear of being without a car and having a large payment looming over your head. In the event that you total a vehicle, with payments still left to make on your lease or loan, this type of insurance covers the difference. The difference is the actual cash value (ACV) of your vehicle subtracted from the remaining amount that you owe. The ACV is what your car is worth on the market today. Cars depreciate quickly, and your vehicle may be worth a lot less than when you purchased it.
To understand when it is important to receive gap coverage, think about the current status of the loan or lease on your vehicle. There are two questions to ask yourself. First, do you owe more than the ACV of the car or truck? There are multiple services, such as the Kelley Blue Book, to help you determine the value of your vehicle today. The second question is if you total your vehicle today, can you pay the difference out of pocket and buy a new vehicle? Gap insurance may be the answer if this scenario would cause you grief.
This type of insurance is not a necessity and only adds extra protection. However, some lenders require gap coverage and include it in the lease agreement for an added price. When possible, you should try to receive coverage through a car insurance agency that will add it to your bill. Moreover, insurance agencies, such as AllState, will likely offer better rates and services. It is important to remember this when borrowing for a new vehicle and to give your lease agreement a scrupulous read before being stuck with the coverage you could receive through your auto insurance provider.
The cost of your gap insurance through this company is dependent on a few factors. These include aspects like your driving record, the value and year of the automobile, and your state. To get a better understanding of the cost, consult an AllState agent to receive a quote. You can remove the coverage at any time and should do so if you are no longer upside-down on your loan or lease.
Overall, AllState's gap insurance is often better than the coverage you would receive through a dealership or lending company. It adds to your current plan and protects you from winding up in a terrible situation after totaling your vehicle.
American Family Review
Herman Wittwer started American Family Insurance in 1927. Founded out of Madison, Wisconsin, it primarily offers auto, property and casualty insurance. The company's secondary focus is on health, homeowners, life and commercial insurance.
American Family lists its gap insurance as lease and loan coverage, but the coverage offers all the protection that gap does. After your vehicle has been involved in a total loss accident, it is likely that your standard coverage will only pay for the current value of your vehicle. Cars lose value rapidly: as much as 11 percent the moment you leave the lot. You may find yourself still owing loan or lease payments after the wreck. Gap coverage pays the gap, or difference, between the car's current value and the remaining balance that you owe.
This type of insurance is an added endorsement to your current collision or comprehensive coverage. You cannot receive coverage without having one of these existing plans. To determine the exact gap insurance cost, you will need to consult a local agent and receive a quote. The quoted amount will be determined by some variables, which include your driving record, year and make of your vehicle, and even the state you live in. Gap insurance stays on your plan until you remove it, which you can do at any time. It is advisable you remove it once you do not owe more than the vehicle is currently worth.
If you are still wondering if gap insurance is a valuable type of protection for you, consider the status of your loan or lease and the vehicle's current value. Your lender can typically tell you the actual cash value of your car or truck. If you owe a lot more than your car is worth today, it may be important to get protected. Consider the worst-case scenario: what would happen if you totaled your vehicle today?
It is important to note that many lending companies and dealerships will often require you to have lease and loan coverage. Many will offer it to you and add the cost to your monthly car payments. However, if it is possible, it is nearly always smarter to receive the coverage from an insurance agency, like American Family Insurance. In most cases, the insurance company will offer you better rates and service.
Overall, American Family Insurance's lease and loan coverage protects you from making payments on a car long after a total loss accident. Car loans and leases can take several months to pay off; this insurance prevents you from making these payments on a car you no longer drive. However, you need to have an existing comprehensive or collision coverage plan to receive gap protection.
Ameriprise Financial Incorporated has been offering financial services since 1894, which makes it one of the oldest companies in the industry. With its headquarters in Minneapolis, Minnesota, it is the largest company in the United States that provides financial planning and insurance. Up until 2005, the company acted as a subsidiary under the American Express Company.
Its gap coverage helps bail drivers out of having to continue making payments on a vehicle that has been involved in a total loss accident. A total loss accident is any accident where the resulting damage is more than the car's value. This coverage works in tandem with other basic forms of auto insurance. In many cases, if you are involved in an accident that totals your automobile, the basic policy may pay out less than you owe on the vehicle. Gap insurance pays the gap between the car's current, actual value and the remaining balance on your loan or lease.
The cost of this insurance depends on many different conditions, including the year and make of the vehicle, your driving record, and even the state you are in. Ameriprise only offers gap coverage on newly purchased vehicles. In 2005, it partnered with Ford Motor Company and now offers additional benefits and discounts to Ford drivers. The coverage is only available if you also add the New Car Replacement Coverage to your plan. In the event that you wreck your vehicle beyond repair, New Car Replacement Coverage pays for a new one (it must be the same make and model). To determine what it would cost to add these endorsements to your existing plan, you should consult a local agent and receive a quote.
There are a few instances where you should consider getting gap insurance. The first case involves the status of your loan or lease. If you owe more than your vehicle is currently worth, think about whether or not you could afford to make those payments and acquire a new vehicle if yours was wrecked or stolen. Secondly, some leasing companies require you to have gap coverage and many will include the added price in your payments. Read your lease agreement carefully and be aware that you do not need to use the leaser's coverage. Ameriprise and other auto insurers will often offer better prices and customer service than a leasing company will.
In summation, this type of insurance can protect you from continuing to pay for a vehicle that you have wrecked. Ameriprise offers coverage that will pay the difference between the car's value and what you owe. However, you have to add New Car Replacement Coverage to your plan in order to be qualified for gap protection.
Esurance has been around for several decades and offers a variety of other insurance policies. Gap insurance is part of its comprehensive coverage in the company's auto policies.
Esurance was established back in 1999, making it one of the younger auto insurance providers available in the United States. It is a subsidiary of Allstate and offers information on other companies on its website, along with its own rates. As one of the earliest companies to offer auto and gap insurance information online; it also was one of the first to give consumers information about those other companies to help make a fully informed choice, even if the best quote is not with Esurance.
In addition to establishing online quotes, Esurance also became the first auto insurance company to recognize same-sex partnerships and to give discounts for this demographic as well. This company offers a variety of other insurance coverages, including insurance policies for motorcycles, ATVs, boats, PWCs, RVs, homeowners, renters, floods, health, life, pets, cell phones and businesses.
The actual gap insurance over your vehicle is the difference between what is owed and the cash value of the vehicle. Esurance uses a specific formula to calculate how much is actually paid out. The policy uses the difference between the amounts paid to the financial institution and balances that are against the amount that is still owed on the vehicle. Then, Esurance pays that difference, but only up to 25 percent of the total worth of your car.
This coverage is not used during a regular accident. In order to use your gap policy, your vehicle must be totaled and declared a total loss. If it is stolen, the insurance company must declare it a loss in order to pay out the money you qualify for. Without this insurance, you may only receive the actual cash value, instead of the money you paid out of your pocket. With it, you lose much less of your investment and can use that money toward a new vehicle that is the same or different from the one you picked. You must get a quote from the provider to get specific details about your plan.
Esurance is an innovator in the way it offers information about its coverage and the coverage of other providers. Also, it offers a variety of other plans that you can bundle with your gap insurance.
Farmers Insurance Review
Farmers Insurance offers gap insurance, called residual debt coverage, to provide additional protection to new and leased cars. New cars depreciate quickly, and many car owners find they owe more money on their vehicle than the market value. This additional coverage will protect you in the event your car is totaled or stolen and declared a total loss.
How does gap insurance work? If your car is totaled or stolen, residual debt coverage covers the difference between the value of your car and the amount you owe on your lease or loan. Auto policies without this additional coverage will only pay you the market value of your car. Since new cars depreciate quickly, you can end up owing money on your car loan even after the insurance claim is paid.
Gap insurance is an optional policy that you can add to your auto theft and collision coverage. Although any vehicle can qualify for residual debt coverage, drivers who made a down payment of less than 20 percent, lease a vehicle or have financed the vehicle for more than 72 months will benefit the most from this coverage. You can also benefit if you have rolled negative equity from a trade-in into your new car loan, or if you drive a vehicle that depreciates faster than typical vehicles, such as a luxury or sports car.
Farmers Insurance is one of the largest American insurance companies. It serves more than 10 million households across the United States and has over 50,000 agents. It offers a broad range of insurance and financial services products, including home, renters, auto, life, motorcycle and pet health. You can contact any of its numerous agents for additional information about its policies and for gap insurance quotes.
This insurance company also offers other auto coverage options that drivers appreciate, including accident forgiveness; no fault, no foul, small claim forgiveness; and incident forgiveness. With these additional coverages, your insurance rate remains unchanged if you are in an accident and it isn't your fault, if you are in a small fender bender (even if it is your fault), or if you get a speeding ticket but don't file a claim.
Farmers Insurance is a large insurance company that offers optional gap insurance for your car in addition to your auto policy. This additional coverage is a good choice for drivers who owe more than the market value of their vehicle on a lease or loan. Drivers who have older cars or who owe less than the car's value on a lease or loan may not benefit from this coverage.
Freeway Insurance Review
Freeway Insurance has been around for decades and offers insurance policies only in specific states. Gap coverage is part of the comprehensive plan of its policies and is optional.
Established in 1987, Freeway is a privately-owned company that boasts about the size of the brokerage. Aside from auto insurance and gap insurance, it offers a variety of different plans that contain specific discounts that are not available with other providers. To help select a plan, the company offers English- and Spanish-speaking representatives. It is not available all over the United States. To get any insurance with this company, you must live in one of the following states: Arizona, California, Illinois, Nevada, New York or Texas.
The coverage provided for your vehicle is primarily determined on location. It must be located in one of the states specified above to qualify. Also, the vehicle has to be financed under a loan or lease to qualify. Those who own their vehicles do not qualify for Freeway's gap coverage. Freeway also offers insurance for homeowners, businesses, renters, motorcycles, life, health, landlords, AD&D, watercraft and commercial vehicles. When you combine policies, you become eligible for several discounts for keeping your coverage with the same insurance provider.
The actual gap insurance over that vehicle is typically the difference between what is owed and the cash value of the vehicle. Freeway calculates the total payout using a specific formula. The policy uses the difference between the amounts paid to the financial institution and the balance that is still owed on the vehicle. This coverage is not used during any accident. To use your insurance, your vehicle must be totaled and declared a total loss. If it is stolen, the insurance company must declare it a loss to pay out the money you qualify for. Without gap insurance, you may only receive the actual cash value instead of the money you paid out of your pocket. With it, you lose much less of your investment and can use that money toward a new vehicle that is the same or different from the one you picked. This company does not restrict it to a specific percentage, but you must get a quote from the provider to get specific details about your plan.
Freeway Insurance is limited in the total payout for gap insurance and is one of the younger insurance companies available. However, it does offer a variety of other coverage policies to combine with your gap policy. To get a full quote and complete policy details, you must enter your personal information on the company's site.
Nationwide offers gap coverage as an optional part of its comprehensive coverage. The company has been around for decades, delivering a variety of different policies to its members.
Established in 1925, Nationwide has evolved over the years to bring many different types of coverage, along with gap insurance for vehicles. This company is a Fortune 500 company and has been one of the leaders in offering insurance products for many years. Over the years, it has opened arenas and banks in its name and is a privately owned company, owned as a subsidiary of Nationwide Mutual Insurance Company since it bought out their stock. The company contributes financially and with time to charities to help children and others in need so that your money spent with them goes further than just your comprehensive coverage policy. This company has been well established over many years as a reputable insurance provider.
The gap coverage provided for your vehicle is first determined based on the newness of the vehicle. This company does not apply this type of coverage to vehicles older than six years. This is unhelpful to car owners or prospective car owners that find older vehicles to finance since they are not qualified for this specialized type of coverage. It is not required, but it is an option for those who get their auto insurance policy through Nationwide.
The actual gap insurance over the vehicle is typically the difference between what is owed and its cash value. Nationwide uses a specific formula to calculate how much is actually paid out. The policy uses the difference between the amount paid to the financial institution and the actual replacement value of the vehicle. This coverage is not used during any accident. In order to use your policy, your vehicle must be totaled and declared a total loss. If it is stolen, the insurance company must declare it a loss in order to pay out the money you qualify for. Without gap insurance, you may only receive the actual cash value instead of the money you paid out of your pocket. With it, you lose much less of your investment and can use that money toward a new vehicle. This company does not restrict it to a specific percentage, but you must get a quote from the provider to get specific details about your plan.
Nationwide Insurance is a long-standing company that offers a general gap insurance plan to keep you from losing any money spent on a new vehicle. However, it does limit the vehicle your purchase to being more recent than six years since it was produced.
Headquartered in Mayfield, Ohio, Progressive Insurance has been a source for car insurance in the United States since 1937. Ranked 157 on the Fortune 500 list, the company provides commercial, personal and other protection insurance. In addition, it offers insurance for motorcycles, RVs, commercial vehicles, boats and more.
Progressive refers to its gap insurance as loan/lease payoff coverage. It pays out after a total loss accident: an accident where your vehicle sustains damage higher than its value (or 80 percent of the value under some plans). When a difference occurs between the value of the car and the value of your loan or lease, loan/lease payoff coverage pays the difference.
If you are wondering is gap insurance worth it, consider whether you are upside-down on your loan or lease. This means you owe more than the vehicle is worth on today's market. The Kelley Blue Book value determines the actual cost of your vehicle. There are other services that help you figure out the cost. In many cases, your insurance company will report to you the vehicle's current price. If you are upside-down on your loan or lease and would not be able to pay the difference if you totaled the car today, gap coverage is a valuable piece of insurance to look into.
This insurance provider's coverage has a few constraints you should know. Gap coverage claims require you to have either comprehensive or collision protection through Progressive. In most cases, your comprehensive or collision insurance will cover most of the damage to your vehicle. Gap insurance covers the remainder, the gap, between this and what you may still owe on the automobile. Its loan/lease payoff has a ceiling of 25 percent of your vehicle's actual value. While it is rare that this stipulation would ever restrict you from receiving protection, it could occur if you totaled a brand new car without making many payments yet.
Gap coverage is sometimes included in a lease agreement from certain companies. It is important to thoroughly read and understand your agreement with your leasing agency to determine whether you are already covered. The gap insurance cost is typically cheaper with an insurance company and it adds to your monthly payment, which makes it more convenient to pay. If it is possible, try to get this coverage through an insurance company.
Overall, Progressive Insurance covers many different types of vehicles with gap insurance. In most cases, the cost will be less than it would be if you got loan/lease payoff coverage from your leasing company or dealership. However, Progressive requires that you have its comprehensive or collision insurance and will only cover 25 percent of the actual cost of your vehicle.
Travelers Insurance Review
Travelers Insurance offers gap insurance as an optional addition to its auto policy that protects your vehicle in the event that it is totaled or stolen. New vehicles depreciate quickly and many leased-car drivers and car-loan holders end up owing money if their car is totaled or stolen and declared a total loss.
How does gap insurance work? This type of coverage is applied in addition to your collision and theft coverage. In the event that your car is declared a total loss, the coverage protects you by paying the difference between the value of your vehicle (minus your deductible) and the amount you still owe on your lease or loan.
Gap insurance is useful for cars that are leased or financed, especially if the car is new or expensive. The amount of coverage is calculated by subtracting the market value of your car and your policy's deductible from the amount you owe. This means that the policy will pay off your car loan or lease (minus your deductible) if your car is declared a total loss.
The company has more than 150 years of experience and thousands of employees and agents. It offers extensive services, support and insurance expertise. Any of its numerous agents can provide gap insurance quotes and information about its auto policies and other types of insurance, including boat and yacht, homeowner, rental and condo, business, flood, identity fraud, valuable items coverage, umbrella, and weddings.
This insurance company also offers numerous auto policy discounts. Safe drivers can receive a discount of up to 23 percent, multiple insurance policy holders can receive a discount of up to 13 percent and those without any gaps in their insurance can receive a continual coverage discount of up to 15 percent. You can also save up to 10 percent if you purchase a car that is less than 3 years old, shop for insurance before your current policy expires, or own a hybrid or electric car. Good students, multiple car owners, trained drivers and homeowners are also eligible for discounts.
Travelers Insurance is a long-standing insurance company that offers optional gap insurance to protect your car. This coverage is a good choice for those who owe more than the market value of their vehicle on a loan or lease. The company also offers numerous discounts and other insurance policies so you can have one insurance company for all of your insurance needs. If you have a custom car or a lot of aftermarket upgrades, you will also need an auto policy that includes custom parts and equipment coverage.