Can i buy gap insurance

Written by. Cynthia Widmayer has over two years of experience as a personal finance writer. She covers home, car and life insurance products for Bankrate, the Simple Dollar, and Coverage. Edited By Rebekah Personius. Edited by. Rebekah Personius.

Rebekah Personius is an insurance editor for Bankrate. She coordinates the creation of educational insurance content that helps people make informed insurance decisions. Rebekah …. Reviewed By Mark Friedlander. Reviewed by. Mark Friedlander. Director of corporate communications, Insurance Information Institute.

Mark Friedlander is director of corporate communications at III, a nonprofit organization focused on providing consumers with a better understanding of insurance.

Share this page. Bankrate Logo Why you can trust Bankrate. We guide you throughout your search and help you understand your coverage options. We provide up-to-date, reliable market information to help you make confident decisions. We reduce industry jargon so you get the clearest form of information possible.

Bankrate Logo Editorial Integrity. Key Principles We value your trust. Bankrate Logo Insurance Disclosure. Read more From Cynthia. About our review board. You may also like Gap insurance in Michigan. If your loan balance is less than your car's value, you no longer have a gap to worry about. Buying a new car is an expensive proposition these days. The average loan term is now 69 months. You wouldn't dream of skipping collision insurance on that car, even if your lender allowed you to do it.

But you may consider gap insurance to supplement your collision insurance for the period of time that you owe more for that car than its actual cash value. That is what your collision insurance policy will pay out if the car is wrecked. A quick look at a Kelley Blue Book will tell you whether you need gap insurance. Is your car currently worth less than the balance on the loan? If so, you need gap insurance. That said, your cost will vary according to the usual laws of insurance.

That is, your state, age, driving record, and the actual model of the vehicle all play a part in pricing. Going to an insurer for gap coverage is usually cheaper than the two other options, going through the dealer or a lender, according to Bank Rate Monitor.

In fact, some are required by state law to offer it. But dealers typically charge substantially more than the major insurance companies. So, it pays to shop around a bit, starting with your current auto insurer.

Many insurers will allow you to add gap insurance to your existing auto insurance policy. Another advantage of going with a big-name carrier is that it's easy to drop the gap coverage once it no longer makes financial sense. Here are some brief answers to the most commonly-asked questions about gap insurance.

If there is any time during which you owe more on your car than it is currently worth, gap insurance can definitely be worth the money.

By then, you should owe less on the car than it is worth. If the car is wrecked, you won't have to pay out-of-pocket to make up the shortfall between the insured value of the car and the amount you owe a lender.

Gap insurance is particularly worth it if you take advantage of a dealer's periodic car-buying incentive. If you're getting a deal for a low down payment and three months "free," you are surely going to be upside-down on that loan for many months to come. Comprehensive auto insurance is full coverage. It includes collision insurance but also covers every unexpected calamity that can destroy a car, from vandalism to a flood.

But it pays the actual cash value of the car, not the price you paid for it or the amount you may still owe on the loan.

Gap insurance covers the difference. So, you need gap insurance if there is indeed a gap between what you owe and what the car is worth on a used car lot. That is most likely to occur in the first couple of years of ownership, while your new car is depreciating faster than your loan balance is shrinking. You can cancel the gap insurance once your loan balance is low enough to be covered in full by a collision insurance payment.

Think of it as a supplemental insurance policy for your car loan. If your car is wrecked, and your comprehensive auto insurance policy pays less than you owe the lender, the gap policy will make up the difference. The easiest way, and probably the cheapest way, is to ask your auto insurance company if they can add it to your existing policy. You can compare prices online to make sure you're getting the best deal.

The car dealership will probably offer you a gap policy but the price will almost certainly be higher than a major insurer will offer. In any case, check to make sure you don't already have gap insurance on your vehicle. 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 update should be done soon. This feature is not currently available. Please try again later. There are three main ways to buy gap insurance:. From your auto insurer , as part of your regular insurance payment.

From a company that sells gap insurance only. Stand-alone gap insurance is typically sold online through a one-time purchase from a website such as Gap Direct. Through the dealership or lender , rolled into your loan payments. If you buy through your dealership or lender:. However, your lender will generally require you to buy comprehensive and collision coverage.

A dealer may automatically include gap insurance if you lease your car, so make sure to check your lease agreement. If you already bought gap insurance from your dealer and want to buy it from your insurer, you may be able to remove it from your contract.

Make sure you have coverage during the transition if you switch providers. Some of the largest insurance companies that offer stand-alone gap insurance as add-ons to car insurance policies are:. American Family. Liberty Mutual. Other companies may sell gap insurance or a similar policy as part of a loan or lease.

To find the best company for you, compare car insurance rates with at least three insurers. Prices and interest rates will vary, so always check with your dealer and car insurance company to accurately compare costs.