Gap insurance is a very important type of insurance for you to have if you lease or finance a new vehicle. Gap insurance will pay the difference between the amount that you owe on your auto loan or to pay off your lease and the Actual Cash Value (ACV) of the vehicle in the event that you are in an accident and the vehicle is totaled.
The reason why this is an important type of insurance to have is that a car’s value starts to depreciate as soon as it is driven off the lot. This means that the Actual Cash Value of the vehicle drops as its odometer reading goes up. The amount that you owe on your auto loan, on the other hand, does not decrease as quickly. If you are in an accident and your vehicle is damaged beyond repair, your car insurance company will only pay up to the ACV of the vehicle. You are still responsible for paying off your auto loan even though you can no longer drive the car.
Which Auto Insurance Companies Offer Gap Insurance
Not all auto insurance companies offer Gap insurance. Yet, many large national insurance providers do offer this type of insurance. Here is a list of major auto insurance companies that offer Gap Insurance:
>>MORE: Does Geico Offer Gap Insurance?
21st Century offers Gap insurance that covers the difference in your indebtedness on your auto loan or lease and the ACV of your vehicle which is the amount that your insurance company traditionally pays if your car is totaled. 21st Century offers Gap insurance in Arizona, Colorado, Idaho, Iowa, Kentucky, Montana, New Mexico, Oregon, Nebraska, Tennessee, Utah, Washington, and Wisconsin.
21st Century is a subsidiary of Farmers that offers average to slightly above average rates and its claims satisfaction rating is slightly below the national average.
AllState offers Loan/ Lease GAP Coverage that covers the difference between what you owe on your loan or lease and the ACV of your vehicle if your vehicle is totaled or stolen. AllState offers this coverage both through their insurance company directly and through some authorized car dealers.
AllState is a large national insurance company with above average auto insurance rates and a slightly below average claims satisfaction rating. The company very sold financially.
American Family offers Gap insurance which it calls Loan/ Lease Gap insurance. Your loan must be a vehicle loan and used only to purchase a vehicle for Loan/ Lease Gap coverage to apply. Thus, if you use a home equity loan to purchase a vehicle, you do not have Loan/ Lease Gap coverage.
American Family auto insurance is only available in 19 states. The company offers excellent rates although its claims satisfaction rating is rather low.
Esurance offers Loan/ Lease Gap Coverage as well. This auto insurance company will pay up to 25% of the Actual Cash Value of the vehicle with its Loan/ Lease Gap Coverage.
Esurance is a digital direct seller of auto insurance whose main competitors are Geico and Progressive. The company, however, does not offer rates as low as Geico and its claims satisfaction rating is lower than most major auto insurance companies.
Farmers auto insurance offers a New Car Pledge Program that you can add to your car insurance along with full Gap insurance to replace a vehicle if it is a total loss within the first two years of ownership or 24,000 miles.
Farmers is a large national auto insurance company with an excellent claims satisfaction rating and average auto insurance rates. The company is very financially stable.
Nationwide offers Gap insurance as an add-on to your collision policy. It is offered as an optional add-on for newer cars. The coverage is available for vehicles that are less than 6 years old and is only available in select states.
Nationwide points out that many auto loan lenders require Gap insurance if you finance of lease a car and this insurance may already be added into your loan or lease payment; thus, you should check your paperwork before purchasing additional Gap Insurance.
Nationwide is a large national insurance company with excellent financial stability and reasonable rates. The company, however, has a below average claims satisfaction rating. Additionally, Nationwide is not available Alaska, Hawaii, Louisiana, or Massachusetts.
Progressive offers a type of Gap insurance coverage that the company calls Loan/ Lease Payoff Coverage. Progressive will pay up to 25% over your car’s value. The company boasts that the average cost of their Gap insurance is approximately an additional $5 a month on your car insurance bill. Furthermore, after you add Gap insurance coverage, it will last for the duration of your policy. And you can easily remove the coverage if you no longer want it.
Progressive is a large national insurance company with excellent financial stability. It is a digital direct seller of insurance whose main competitors are Geico and Esurance. Progressive’s rates are reasonable but not as low as Geico. The company also has a low claims satisfaction rating.
State Farm calls its Gap insurance Payoff Protector. This type of insurance is automatically included with every vehicle that is financed through State Farm Bank. And the coverage is free for these vehicles. You get the coverage if you have a loan through State Farm Bank, even if you do not have State Farm auto insurance. Because it applies to cars financed through State Farm Bank, in the event that your vehicle is totaled or stolen, the difference between the amount your insurance company pays out on a total loss claim and your outstanding loan principle is cancelled. Your auto loan must be in good standing for Payoff Protector to apply. If your loan is 30 days or more past due, Payoff Protector may not apply.
State Farm is the largest auto insurance company in the United States and it is very financially stable. The company has average rates and a slightly above average claims satisfaction rating.
Travelers Auto Insurance
Travelers calls its Gap insurance Loan/ Lease gap insurance. To qualify for this type of coverage from Travelers, your car must be purchased from a new car dealer and you must be the original owner. Furthermore, the coverage does not cover carryover balances, lease penalties, overdue payments, or extended warranties.
Travelers insurance is a large national auto insurance company with strong financial stability and an above average claims satisfaction rating. The company’s auto insurance rates are high compared to other auto insurance companies.
USAA offers Gap insurance which it calls Total Loss Protection for members who finance a vehicle through USAA. It is available for a flat fee and this fee can be added to your loan principle. It is important to note that this amount may be significantly less than the difference between the value of your vehicle and the balance of your loan.
USAA auto insurance is reserved for members of USAA who must be current or former members of the military or their immediate family members. The company has an excellent claims satisfaction rating, is financially stable and offers excellent rates.
Gap insurance is a very important type of insurance for you to have if you finance or lease a vehicle so that you will not be stuck paying off your loan out of pocket should you car be totaled or stolen. There are a number of auto insurance companies that offer Gap insurance. 21st Century, AllState, American Family, Esurance, Farmers, Nationwide, Progressive and Travelers Insurance offer this type of insurance to their policyholders. State Farm and USAA offer Gap insurance to consumers who finance their vehicle through the company’s bank. Since gap insurance on average only adds a few dollars a month to your car insurance bill, this is an excellent type of insurance for you to add to your policy if you finance or lease a new vehicle.