Can you get gap insurance at any time?

Can you buy gap insurance at any time?

You can buy gap insurance at any time after you buy your car. Your car must meet the requirements set out by the insurance company. While those will vary, they are usually:

• The car is under a certain age, usually three years old or less.
• The car is under certain mileage, which can vary.
• You must carry comprehensive and collision coverage if you buy gap insurance from a car insurance company.

Beyond that, as long as you still have a loan on your car, you can buy gap insurance.

When should you get gap insurance?

Many drivers purchase gap coverage at the start of their car ownership to limit risk when driving off the lot.

"You can also purchase gap insurance coverage after the fact. Just be aware that different insurance companies have different rules about when you can do that." David Straughan, a senior insurance writer at The Detroit Bureau, says.

For example, if you purchase a new-to-you used vehicle, some insurance companies only offer gap insurance for recent model years or cars under a certain mileage. According to Straughan, most insurance carriers won't allow you to get gap coverage after a car is two or three years old.

Where can you buy gap insurance?

There are a few different ways to get gap insurance: car dealerships and insurance companies.

"These days, many manufacturers offer gap insurance at the dealership when you buy a vehicle," Straughan says. "But you can also buy gap insurance from a number of insurance companies. Not all of them offer it as a product, though, so be sure to ask."

How and when you pay for gap insurance depends on how you got coverage:

• If you purchase gap insurance through a car dealership, it's usually a one-time upfront fee that you pay along with the sales tax, documentation fee, etc.
• If you go through your car insurance company, gap insurance is included with your monthly payments.

Getting a quote from your dealer and your personal insurance company is a good idea if you're looking for the cheapest gap insurance. Remember that the gap insurance cost depends on the amount of money you financed and the vehicle's value.

Is gap insurance worth it?

Gap insurance can come in handy if you’re leasing or financing a new car. During the first few years of your lease or loan, you may have negative equity in the vehicle. That means you owe more money on the car than what it's worth.

If your car is totaled or stolen, your auto insurance company compensates you based on the car's actual cash value (ACV). However, you're still responsible for paying off the remaining loan or lease balance.

Gap insurance covers what you owe, so you aren't reaching into your pocket to cover the difference.

Here's an example:

• You purchase a new car that costs $40,000.
• Two years into your ownership, your car gets totaled in an accident, and the car insurance company tells you that the car's depreciated value is now $20,000.
• You still owe $25,000 on the loan. Without gap insurance, you would have to pay the $5,000 difference. But if you had gap coverage, that money would be covered by insurance.