When is gap insurance necessary

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Enter your 5 or 9 digit ZIP Code. Continue a saved quote » Find an agent ». When to consider gap insurance If you're wondering if you need gap insurance, there are a few things you should consider. Gap insurance is a good option for the following types of drivers: Drivers who owe more on their car loan than the car is worth.

Again, this is different from the amount you paid for the car. Is there a gap? If so, you should strongly consider gap insurance. Drivers whose car loan requires gap insurance. Regardless of what you owe on your loan, some loan providers require gap insurance from the outset of your loan. Drivers whose lease requires gap insurance. Many auto leases require gap insurance as a protective measure. Some lease providers may already include gap insurance in the price of the lease.

If you finance through a credit union, though, it may be less expensive, but you will pay interest on your insurance with a credit union. Talk to your insurance provider about their gap insurance options. If your insurance company doesn't provide gap coverage, you may need to contact another insurer for stand-alone gap coverage.

Other insurers sell gap insurance or comparable products as part of a lease or auto loan. You can purchase gap insurance from State Farm if you are financed directly through their bank, but you can not get a regular auto policy this way. Gap insurance isn't the only type of coverage for totaled or stolen vehicles.

If you cannot find gap insurance or it doesn't seem to be the right coverage for you, check out loan or lease payoff coverage or new car replacement coverages. Loan or lease payoff insurance is a gap insurance alternative that may be available for used cars. While gap insurance only covers new vehicles, loan or lease payoff insurance pays a preset percentage of the vehicle's ACV, typically around 25 percent, in addition to the claim payout from your comprehensive or collision coverage.

If you owe more on your loan than your car is worth, make sure the amount you would receive from this type of insurance is greater than or equal to the remaining balance on your loan or lease after a claim. If you would rather purchase a new vehicle than pay off your old one, new car replacement insurance is the right choice. New car replacement insurance will pay some or all of the costs to replace a vehicle of the same make, model, and year as the totaled or stolen car.

New car replacement is similar to gap insurance in that it is typically only available for new cars. You can receive quotes for gap insurance on its own or find rates for gap insurance as a part of your full coverage policy.

While many insurers offer gap insurance with their regular auto policies, most do not, so shop around and get the right insurance at the right price today! Is Gap Insurance Worth It? Do I need gap insurance? New Cars. Buyer's Guide. Type keyword s to search. Today's Top Stories.