Where to buy gap insurance
You can buy gap insurance at several different places. Many national insurance carriers, such as State Farm, Travelers, and Nationwide, offer gap insurance, as do regional insurers, such as Erie, Vermont Mutual, and The Hanover.
Car dealerships are often full-service, meaning they have sales, service, finance and insurance departments that offer regular car insurance and gap coverage. The dealership may require gap insurance if you lease a car with them; other times, it’s up to you to inquire about adding this coverage. You may be charged more at a dealership than through your insurance company, so keep that in mind.
There are stand-alone companies that specialize in gap insurance, such as EasyCare. They have plans that cover the difference between your insurance settlement and what you still owe on your car and your deductibleThe deductible is the amount you pay out of pocket for a covered loss when you file a claim..
Be aware that regulations surrounding gap insurance vary greatly depending on the state. Some states don’t consider it insurance; they consider it a type of warranty product. Others regulate it like insurance. Before you sign on the dotted line, make sure you understand what you’re purchasing. Ask about any exclusions because, depending on the gap product, there are always some.
You can buy gap insurance online or by calling the insurance company directly.
Here’s a list of some national and regional carriers that carry gap insurance:
- Vermont Mutual
- Mapfre Insurance
- Frankenmuth Insurance
- Auto Club Group - ACG (AAA)
- Erie Insurance
- Safety Insurance
- The Hanover
- State Farm
- Auto-Owners
- Travelers
- American Family
- Nationwide
- Shelter Insurance
- Auto Club Enterprises (AAA)
- Iowa Farm Bureau
- Kemper
- Progressive
- The Hartford
- Mercury Insurance
- Amica
- Allstate
- Farmers
- Sentry Insurance
- CSAA Insurance (AAA)
Which company has the cheapest gap insurance?
Take a look below at national and regional insurance carriers that carry gap insurance. You’ll note that Sentry Insurance has the cheapest gap insurance, which is only $24 in added annual premiums. Safety Insurance is the second-cheapest at $25.
That doesn’t make them the cheapest overall, as other carriers have lower rates even with the addition of gap insurance. Note that all rates are for full coverage with 100/300/100 in liability coverage and $500 deductibles. You will be required to carry full coverage in order to buy gap insurance.
| Company | Average annual premium without gap coverage | Gap insurance premium add-on | Difference |
|---|---|---|---|
| Sentry Insurance | $5,956 | $5,980 | $24 |
| Safety Insurance | $1,772 | $1,797 | $25 |
| Iowa Farm Bureau | $2,517 | $2,543 | $26 |
| Mercury Insurance | $2,962 | $3,004 | $41 |
| State Farm | $1,822 | $1,869 | $46 |
| Travelers | $1,977 | $2,026 | $49 |
| USAA | $996 | $1,047 | $51 |
| Progressive | $2,640 | $2,692 | $53 |
| American Family | $1,998 | $2,056 | $58 |
| Auto-Owners | $1,850 | $1,912 | $62 |
| Nationwide | $2,115 | $2,183 | $69 |
| Mapfre Insurance | $1,424 | $1,493 | $70 |
| Vermont Mutual | $1,353 | $1,424 | $71 |
| The Hanover | $1,760 | $1,831 | $71 |
| Auto Club Group - ACG (AAA) | $1,423 | $1,505 | $82 |
| Auto Club Enterprises (AAA) | $2,394 | $2,483 | $89 |
| Kemper | $2,531 | $2,622 | $91 |
| Frankenmuth Insurance | $1,402 | $1,503 | $101 |
| Shelter Insurance | $2,366 | $2,480 | $114 |
| Allstate | $3,947 | $4,066 | $119 |
| The Hartford | $2,770 | $2,891 | $121 |
| Amica | $3,063 | $3,189 | $127 |
| Farmers | $4,021 | $4,178 | $158 |
| CSAA Insurance (AAA) | $6,134 | $6,302 | $168 |
| Erie Insurance | $1,390 | $1,628 | $238 |
*USAA is only available to military members and their families
Why should I buy gap insurance?
If you’ve made a low down payment, you may owe more on the car than what it’s worth. People with larger down payments may not need gap insurance.
If you have a car loan, it might be months or years that you’re “underwater” on your loan. Cars depreciate as soon as you drive them off the lot, so what you paid for the car and what you owe may be one dollar amount, while the car’s fair market value is another number. If your car is declared a total loss, your insurance company will only pay what the vehicle is worth. If what you owe on your car loan is more than that, you still have to pay off that loan.
“Without gap insurance, drivers in this situation could be stuck with no car and an outstanding loan balance,” McKenzie says.
Some gap insurance covers only the loan payoff, while others pay your insurance deductible.
If you don’t have cash in the bank to pay the difference between what your insurance would pay out in a total loss and the remainder of what’s owed on your car, you should consider purchasing gap insurance.
How to choose the best gap insurance coverage
When you purchase gap insurance, ask a lot of questions. Ask about exclusions to the coverage. For instance, gap insurance will pay off your loan, but what if you have late fees or finance charges? What if you have other fees, like excess mileage charges if you’re leasing the car? Be aware of all coverage and all exclusions.
Remember, gap insurance is designed for people who owe more on their loan than the car is worth. You may not need gap insurance if you put a large down payment on your car. If you put a small down payment, you still owe a large portion on the loan, and gap insurance is designed for you.
Choose a plan that helps your financial situation the most. Do you have a savings account? Will you be able to pay your deductible in the case of an insurance claim? Some gap coverage will also pay your deductible. Ask about this option.
Frequently asked questions
Where can I buy gap insurance online?
You can buy gap insurance online at EasyCare. You may also be able to add gap insurance to your existing car insurance policy online or when purchasing a new policy. Check with your carrier.
Where can I get affordable gap insurance for my new car?
Gap insurance is usually cheaper when added to your car insurance rather than when purchased as standalone coverage, especially through a dealership. “Typically, gap coverage adds about $10 to $15 per month to an auto policy and can offer important financial protection in the early years of a loan or lease,” McKenzie says.
Can I buy gap insurance after purchasing a car?
Yes, you can generally buy gap insurance at any time as long as you still owe more on the vehicle than what it’s worth. Check with your insurer to ask if there is a time limit; some insurance companies do have time restrictions.
Can I switch gap insurance providers?
Yes, you can switch gap insurance providers. Make sure you have purchased a new policy before canceling your current policy so you don’t drive without coverage. You can usually cancel your gap insurance and get a refund if you haven’t filed a claim. If your car finance company requires gap coverage, don’t cancel or change anything without consulting them first.
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