What does gap insurance actually cover?

Gap insurance is an optional car insurance coverage that helps pay off your auto loan if your car is totaled or stolen and you owe more than the car’s depreciated value. Gap insurance helps pay the gap between the depreciated value of your car and what you still owe on the car.

Do you need gap insurance if you have full coverage?

Yes, you need gap insurance if you have full coverage and still owe money on a car loan or lease. Gap insurance is needed even if you have full coverage because full coverage does not cover the difference between what you owe on a loan/lease and the car’s actual cash value, like gap insurance does.

Is it worth it to get gap insurance?

Gap coverage is worth it only as long as you are leasing a car or if you owe more on a loan than your car is worth. You don’t need gap insurance if you don’t have a car loan or lease. You won’t need gap insurance forever. Drop gap insurance once your car loan is less than the value of your vehicle.

Do you get money back from gap insurance?

Typically, you should get a full refund on your GAP insurance if you cancel the contract within 30 days of purchasing the policy, though cancelation fees may apply.

Can Gap insurance be purchased separately?

You can buy GAP insurance from the dealership that you bought your new car from or online as a separate policy, whether that’s from an insurer directly or through a financial comparison site.

How Does Gap Insurance work if my car is totaled?

If your car is totaled or stolen, gap insurance coverage will pay the difference between the actual cash value (ACV) of the vehicle and the current outstanding balance on your loan or lease. Sometimes it will also pay your regular insurance deductible.

Can GAP insurance be purchased separately?

Do you get money back when you cancel GAP insurance?

What happens when your car is totaled and you still owe on it?

If your car is totaled and you still owe money on the loan, the insurance company will pay your lender for the car’s value, and you will be responsible for any remaining balance if the check is less than the loan amount.

Do you have to buy gap insurance from the dealer?

Gap lease or loan coverage is usually required by your lender when you make the purchase to cover that difference. But here’s the good news: you don’t have to buy your gap coverage from the dealership. Like anything else, it pays to shop around before you commit.