Colorado gap insurance: Everything you need to know

How much does gap insurance cost in Colorado?

Gap insurance in Colorado costs $4,043 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 Colorado

The cheapest company for gap insurance in Colorado is Nationwide, with an average annual cost of $2,340. Not all car insurance companies offer gap coverage, and rates vary significantly by company.

Check out the table below to find 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 is the most expensive to buy gap insurance with an average rate of $4,515, and Vail is the cheapest with an average of $3,024. Where you live in Colorado can affect your insurance rates. Auto insurance rates are higher in cities with more crime and theft since your vehicle is more likely to be damaged or stolen.

This table shows the average gap insurance rates by city for 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?

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 $14,060 a year, and at 25 the average annual rate is $4,823.

The table below shows the average gap insurance rates in Colorado by 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?

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, imagine you have a $40,000 car loan, but your vehicle's actual cash value is only $35,000. If someone steals your car, your insurance company reimburses 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 pays the remaining $5,000 you still owe on the loan. Without gap insurance, you must cover this difference out of pocket.

Once your loan balance is lower than your car's value, you can drop gap coverage. You can cancel gap insurance anytime, but you may not be able to add it whenever you want. Most insurers require you to add the coverage soon after you buy a car.

Many lenders also require gap insurance when you take out a loan. You can buy gap coverage from your lender or car dealership, but adding it to your existing auto policy usually costs less.

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 law in Colorado, but your lender may require you to have the coverage.

Who should buy gap insurance in Colorado?

If you have a car loan or lease in Colorado, 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 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 a part of your car insurance. You can buy gap insurance from your lender or a private company as an independent policy.

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.