Colorado gap insurance: Everything you need to know

How much is gap insurance in Colorado?

In Colorado, gap insurance costs an average of $4,043 per year, but prices vary by company. Your car's value also affects the cost of gap insurance. Expensive or luxury cars depreciate faster than standard vehicles, so gap coverage may have to pay more, leading to higher rates.

Cheapest gap insurance companies in Colorado

The cheapest gap insurance in Colorado is offered by Nationwide, with an average yearly cost of $2,340. Not all car insurance companies provide gap coverage, and rates can vary significantly among carriers.

Take a look at the table below to see the cheapest Colorado insurance companies for gap coverage.

Company	Auto insurance rates with gap premium	Gap premium
Nationwide	$2,340	$66
Auto-Owners	$2,548	$80
Progressive	$3,560	$97
Kemper	$3,699	$153
Farmers	$8,067	$393

Read our methodology

Average gap insurance cost in Colorado by city

Aurora has the highest gap insurance rates at an average of $4,515 a year, while Vail offers the lowest at an average of $3,024 per year. Where you live in Colorado affects your insurance rates. Cities with higher crime and theft have higher insurance costs because your vehicle is at a greater risk of being damaged or stolen.

The table below lists the average gap insurance rates by city in Colorado.

City	Auto insurance rates with gap premium	Gap premium
Vail	$3,024	$125
Boulder	$3,309	$123
Severance	$3,634	$148
Evans	$3,708	$150
Lone Tree	$3,750	$140
Denver	$3,757	$144
Castle Rock	$3,923	$156
Colorado Springs	$4,133	$161
Englewood	$4,162	$152
Sterling	$4,312	$198

Read our methodology

How much is gap insurance in Colorado by age group?

Gap insurance rates are higher for younger drivers because they have less experience and are more likely to take risks while driving, increasing the odds of a total loss. As drivers get older, their rates go down. For example, an 18-year-old pays an average of $14,060 per year, while a 25-year-old pays around $4,823 annually.

The table below lists the average gap insurance rates in Colorado based on age.

Age group	Auto insurance rates with gap premium	Gap premium
Teen	$14,060	$504
Young adult	$4,823	$187
Adult	$4,043	$158
Senior	$3,506	$126

Read our methodology

How does gap insurance work in Colorado?

Right after you buy or lease a new car, it depreciates, causing you to owe more than the car is worth. If your car gets totaled, your insurance company pays only the car's actual cash value. This payout may leave you still owing money on the loan. That's where gap insurance helps. If someone totals or steals your car, gap insurance pays the difference between your car's value and the amount 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.

Once your loan is less than the value of your car, you can drop gap coverage. While you can always cancel gap insurance, you may be unable to add it anytime. Most insurers want you to add the coverage quickly after buying a car.

Additionally, many lenders require gap insurance when getting your loan. Although you can get gap coverage through your lender or car dealership, adding it to your current auto policy is usually cheaper.

Where to buy gap insurance in Colorado

Many insurance companies, including major carriers, offer gap insurance in Colorado. 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.

Colorado gap insurance: FAQs

Is gap insurance required in Colorado?

Gap insurance isn't required by Colorado law. However, your lender may require the coverage.

Who should buy gap insurance in Colorado?

You may need gap insurance in Colorado if you lease or finance a car with a small down payment. Since cars lose value faster than loans are paid off, gap insurance can protect you from owing more than your car is worth.

You don't need gap insurance if you own your vehicle or make a large down payment so that you owe less than the car's value from the start of your loan.

What is standalone gap insurance in Colorado?

Standalone gap insurance is a separate policy, not part of your car insurance. You can buy it from your lender or a private company.

Does gap insurance cover leased cars in Colorado?

Colorado gap insurance covers leased cars where the driver owes more than the vehicle's current market value. Over time, you may remove gap coverage once your vehicle is worth more than what is owed.