Colorado gap insurance: Everything you need to know

How much is gap insurance in Colorado?

On average, gap insurance in Colorado costs $4,043 a year, but rates vary by company. The cost of your vehicle also affects gap rates. Expensive or luxurious cars tend to depreciate faster than standard vehicles, meaning gap coverage would have to pay more, which increases coverage 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

Gap insurance costs the most in Aurora, with an average rate of $4,515, while Vail has the lowest rate at $3,024. Where you live in Colorado 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 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

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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, 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. It's relatively easy to add coverage to your current auto insurance policy.

Adding gap coverage to your auto insurance policy is usually the most cost-effective option. While you can purchase gap coverage from most car dealers and lenders, those policies tend to be more expensive, making it a less attractive option.

Methodology

Insurance.com commissioned gap insurance rates from Quadrant Data Services in late 2023 at a variety of ages in all 50 states and Washington, D.C. Base rates use a 40-year-old driver with a 2023 Honda Accord LX. Rates were gathered from 138 insurance companies in 1,468 ZIP codes.

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 if you have a car loan or lease in Colorado. Drivers who make a small down payment typically owe more than the vehicle is worth since cars depreciate faster than the loan is paid down, making gap insurance a good idea.

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 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.