What is gap coverage

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Personal Business. Auto Coverages Discounts Claims. Get a quote. What is gap insurance? Gap coverage adds more protection to your auto policy Gap insurance is an optional insurance coverage for newer cars that can be added to your collision insurance policy. Your lender may require gap insurance If you financed your vehicle with a car loan, your lender might require loan gap insurance in addition to your collision and comprehensive coverage.

These coverages help pay to replace a totaled car, but they factor in depreciation. Due to depreciation, your new car loses value as soon as you drive it off the lot.

Shortly after, your car was totaled in a covered collision. If you own a brand-new car, consider adding this optional coverage to your car insurance policy. Check with your insurer to see if your vehicle qualifies.

Quality Auto Coverage Starts Here. Get a quote Find an agent. That may mean: That you are the original owner of the vehicle you have the original lease or loan on the vehicle That the vehicle is not older than two or three model years Check with your insurer to see what qualifications are required for you to buy gap insurance.

According to the III, you may want to consider gap insurance in the following situations: If you made less than a 20 percent down payment on your vehicle If your auto loan is 60 months or longer If you're leasing a vehicle. If you're leasing a new vehicle, the III notes that many lease contracts include gap coverage. Check yours to see whether you have coverage.

This content is for informational purposes only and may not be applicable to all situations. Coverage subject to terms, conditions, and availability.

Policy issuance is subject to qualifications. Connect With Us. Update Below. ZIP Code. City, State Set Your Location. You have entered an invalid ZIP. Please try again. Location data not available.

Please enter zip code. Please Wait Updating Location It's taking a bit longer than expected. Your insurer may offer better car replacement to cover your loan balance should worse come to worst.

Key takeaways:. ZIP Code. Gap insurance covers what's owed on a car after a total loss. Nerdy tip: Drop gap coverage when your car loan is less than the current value of your car. Online pricing guides like Edmunds or Kelley Blue Book can give you an idea of how much your car is worth. Insurers might not drop it automatically, so you may need to remove it. Here's how gap insurance works:. Gap coverage example.

Loan left to be paid. Current value of car. Comprehensive insurance pays. Is gap insurance worth it? Gap insurance providers.

Nerdy tip: To avoid paying interest on it, NerdWallet recommends buying gap coverage through your auto insurer rather than from a dealership. Not all car insurance companies provide gap coverage or an equivalent or offer it in all states, so you may need to switch companies.

Gap insurance definition. Insurance companies that sell gap coverage. How much does gap insurance cost? Alternatives to gap insurance.

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