Alabama gap insurance: Everything you need to know

How much does gap insurance cost in Alabama?

Gap insurance in Alabama costs $2,358 per year, on average, but rates vary by company. The value of your vehicle also affects the cost of gap coverage. Expensive or luxury cars usually depreciate faster than standard vehicles, so gap insurance may have to cover more, which increases the cost.

Cheapest gap insurance companies in Alabama

The cheapest company for gap insurance in Alabama is Travelers, with an average annual cost of $1,460. Not all car insurance companies offer gap coverage, and rates vary significantly by company.

Check out the table below to find the cheapest Alabama insurance companies for gap coverage.

Company	Auto insurance rates with gap premium	Gap premium
Travelers	$1,460	$39
Auto-Owners	$2,258	$72
Progressive	$2,653	$81
Farmers	$3,062	$129

Read our methodology

Average gap insurance cost in Alabama by city

Gap insurance costs the most in Bessemer, with an average rate of $2,628, while Decatur has the lowest rate at $2,139. Where you live in Alabama can impact your insurance costs. Cities with higher crime and theft rates have higher auto insurance rates since the risk of damage or theft is higher.

Here are the average gap insurance rates by city in Alabama

City	Auto insurance rates with gap premium	Gap premium
Decatur	$2,139	$74
Florence	$2,208	$78
Anniston	$2,231	$75
Alpine	$2,300	$85
Montgomery	$2,306	$85
Groveoak	$2,334	$92
Mobile	$2,358	$77
La Fayette	$2,466	$99
Birmingham	$2,479	$81
Cropwell	$2,494	$87

Read our methodology

How much is gap insurance in Alabama by age group?

Car insurance rates for younger drivers are more expensive because they are more likely to engage in risky driving and lack the experience needed to avoid accidents. Rates go down as the driver gets older. For example, at 18 years old the average rate is $8,627 a year, and at 25 the average annual rate is $2,946.

The table below shows the average gap insurance rates in Alabama by age.

Age group	Auto insurance rates with gap premium	Gap premium
Teen	$8,627	$273
Young adult	$2,946	$102
Adult	$2,358	$80
Senior	$2,097	$66

Read our methodology

How does gap insurance work in Alabama?

When you buy or lease a new car, it depreciates quickly resulting in you owing more than it's worth. If your car is totaled, your insurance company will only pay its actual cash value, which might not cover your full loan balance. That's where gap insurance helps. If your car is totaled or stolen, gap insurance covers the difference between your car's value and what you still owe on the loan.

"Gap is designed for people that take long-term loans and/or roll taxes, service plans, or warranties into their loan," said Zack Pope, agency manager at David Pope Insurance in Missouri. "Most gap coverages only go a certain percent over market value to pay off a loan for a totaled vehicle (typically 25%). It costs significantly less money to get gap through your insurance than to purchase it from the dealership."

For example, let's say you have a $40,000 car loan, but your vehicle's actual cash value is only $35,000. If the car is stolen, your insurance company will reimburse you $35,000, minus your deductibleThe deductible is the amount you pay out of pocket for a covered loss when you file a claim.. Gap insurance would cover the remaining $5,000 that you still owe on your loan. Without gap insurance, you'd be responsible for paying this difference out of pocket.

You can drop gap coverage once your loan balance is below your car's value. While you can cancel gap insurance anytime, you may not be able to add it later. Most insurers require you to add gap coverage soon after buying a car.

Where to buy gap insurance in Alabama

Many insurance companies, including major carriers, offer gap insurance in Alabama. You can easily add this coverage to your existing auto insurance policy or buy a standalone policy.

Adding gap coverage to your car insurance policy usually costs less. You can also buy gap coverage from most car dealers and lenders, but their policies are often more expensive, making them a less appealing choice.

Methodology

We gathered car insurance rates with and without gap insurance through our data partner, Quadrant Information Services.

Averages are annual and based on our full coverage data set. This data set is based on:

Bodily injury liability of $100,000 per person and $300,000 per incident
Property damage liability of $100,000 per incident
Comprehensive and collision deductibles of $500
40-year-old driver
Honda Accord LX
Good credit
A clean driving record
12-mile commute, 10,000 annual mileage

To show the cost of gap insurance, we have compared rates with gap insurance added to the averages without gap insurance, and the difference is shown as the annual cost of gap insurance.

Rates are based on an analysis of over 5 million data points in all 50 states and Washington, D.C. from 138 companies.

Alabama gap insurance: FAQs

Is gap insurance required in Alabama?

Gap insurance isn't required by law in Alabama, but your lender may require you to have the coverage.

Who should buy gap insurance in Alabama?

If you have a car loan or lease in Alabama, you might need gap insurance. If you made a small down payment, you could quickly owe more than your car is worth since vehicles lose value faster than you can pay the loan. In this case, gap insurance can be a smart choice.

You don't need gap insurance if you own your car or make a large down payment.

What is standalone gap insurance in Alabama?

Standalone gap insurance is a policy of its own, not connected with your car insurance. Gap insurance is available from your lender or a private company as a separate policy.

Does gap insurance cover leased cars in Alabama?

Alabama gap insurance covers leased cars when the driver owes more than the car's current market value. You can remove gap coverage once your vehicle is worth more than what you still owe.