Mathew B. Sims is Editor-in-Chief and has authored, edited, and contributed to several books. He has been working in the insurance industry ensuring content is accurate for consumers who are searching for the best policies and rates. He has also been featured on sites like UpJourney.

Full Bio →

Written by

Dan Walker graduated with a BS in Administrative Management in 2005 and has been working in his family’s insurance agency, FCI Agency, for 15 years (BBB A+). He is licensed as an agent to write property and casualty insurance, including home, auto, umbrella, and dwelling fire insurance. He’s also been featured on sites like Reviews.com and Safeco. He reviews content, ensuring that exis...

Full Bio →

Reviewed by Daniel Walker
Licensed Auto Insurance Agent

UPDATED: Apr 27, 2020

Advertiser Disclosure

It’s all about you. We want to help you make the right coverage choices.

Advertiser Disclosure: We strive to help you make confident insurance decisions. Comparison shopping should be easy. We partner with top insurance providers. This doesn’t influence our content. Our opinions are our own.

Editorial Guidelines: We are a free online resource for anyone interested in learning more about auto insurance. Our goal is to be an objective, third-party resource for everything auto insurance related. We update our site regularly, and all content is reviewed by auto insurance experts.

Things to Remember...

  • Shopping online has many advantages
  • Gap insurance covers you if yu change policies or buy a new vehicle
  • If you are financing, whether buying or leasing, then you will need comprehensive and collision coverage

Many excellent advantages exist to shopping for auto insurance online.

It is easy for drivers throughout the nation to get auto insurance quotes quickly that are also free.

Simply enter your zip code above to start finding FREE quotes now.

Working out the Cost of Ownership

AdobeStock_78951175-1600x1600

These are all products that factor into what is known as the cost of ownership.

For instance, maybe your new car has more expensive gasoline taste and requires premium unleaded or mid-grade gasoline. Add that up over the years.

Maybe you have gone from a no-frills vehicle and are now entering the land of luxury vehicles. It might cost nearly $200 every time you need to get an oil change.

Free Auto Insurance Comparison

Enter your ZIP code below to view companies that have cheap auto insurance rates.

 Secured with SHA-256 Encryption

What’s Gap Insurance?

If you have done enough of your homework, you will have an idea of what different models will cost to insure. Use free quotes to determine how much it will cost to buy the same degree of insurance on different cars before you buy.

One more area to check out while you are looking at free quotes online is the gap insurance.

The greatest part of the cost of ownership might be the loan itself, if you do finance your car.

Though, have you ever heard of how much the value plummets when you drive off the car lot? It’s tremendous. Now imagine that you just signed a note for $30,000 and as soon as you drive it off the lot, its value drops to $20,000.

Ok, now imagine that you total the new car on the way home from the dealership. Guess what? Your insurance was at an in-between state and did not apply fully to your new car.

It could be that your insurance is still applying to your old car — one that’s worth $3,000. Your insurance company might decide to reimburse a few thousand dollars based upon the lower value or the old vehicle.

Advantages of Gap Insurance

adobestock_72047239-1600x1600

If you had said “Yes” to gap insurance you would face a far better outcome. The cost of gap insurance can appear seemingly steep unless you have to call on it for benefits.

It can cost hundreds of dollars, so it makes sense that most people ignore or skip this item of coverage, especially when it’s offered by a car dealership’s financing department.

It can cost hundreds of dollars, so it makes sense that most people ignore or skip this item of coverage, especially when it’s offered by a car dealership’s financing department.

Check rates for your insurance online for free quotes while you are looking at all the features and colors of the different car styles you like.

Depending on the point you are at with your loan, compared to how quickly your vehicle loses value, gap insurance may save you thousands of dollars if an accident totals your car.

It is a good idea to carry it as long as your loan balance surpasses the value of your vehicle.

Free Auto Insurance Comparison

Enter your ZIP code below to view companies that have cheap auto insurance rates.

 Secured with SHA-256 Encryption

How Free Auto Insurance Quotes Save You Money

The first tip is that while you are shopping for insurance for your new vehicle, get free auto insurance quotes for gap insurance. It will probably be cheapest when you buy it directly from the car insurance carrier.

In addition, if you are a long-time customer of a particular carrier you trust, then it is advantageous to buy gap coverage through them.

Go ahead and get free auto insurance quotes online from many car insurance companies to make sure you are getting the best bet.

In addition, here is the rule of thumb for knowing when to purchase gap coverage:

  • Financing a new vehicle
  • Leasing a vehicle
  • Having negative “equity” in an old vehicle that you are rolling right along into a new note or lease
  • Putting less than 20 percent down at time of purchase

If you fall into any of those categories, then add gap coverage to your list of insurance “needs.” The great part about finding quotes online is that they are free and available almost instantaneously.

The most important point to keep in mind is that keeping gap insurance is necessary as long as you owe more than the vehicle is worth. It is far cheaper buying it directly from an insurance carrier.

Free Auto Insurance Comparison

Enter your ZIP code below to view companies that have cheap auto insurance rates.

 Secured with SHA-256 Encryption

Typical Requirements for Insurance

adobestock_62445878-1600x1600

In order for you to make the most of your gap coverage and receive the full payoff of the note, you have certain requirements to meet. For one, you might actually be required to have a note secured from a financial institution rather than from an individual.

Beware in this case the lure of say person-to-person lending because it may negate your auto insurance. In addition, if you wanted to get a personal loan from your Aunt Edna rather than financing the vehicle, think again.

If you are financing, whether buying or leasing, then you will need comprehensive and collision coverage. Additionally, you would want those lines of coverage for your vehicle if it is still worth that much.

Keep in mind, as a side note, that you will need to make sure you have money to cover the deductibles for collision and comprehensive in case something happens to your new car.

In general, gap insurance is a blessing for those who are going to owe more than the actual cash value of their new car or leased vehicle.

If you are in this club, this is one area where it is wise to pay for the gap coverage. Taking a chance here could cost tens of thousands of dollars and is a lot for any one person to swallow.

The idea is that shopping for insurance online is free and quick. It makes time for you to look into the cost of often overlooked pieces of insurance, such as gap insurance too. Use the Internet to get the best deal.

Enter your zip code into the FREE comparison tool, located at the bottom of this page.

References:

  1. https://www.geico.com/claims/claimsprocess/total-loss-process/
  2. https://www.bankofamerica.com/auto-loans/financing-car/
  3. http://www.carinsurancecomparison.com/gap-insurance-refund-when-car-is-paid-off
  4. http://guides.wsj.com/personal-finance/buying-a-car/how-to-lease-a-car/
  5. https://www.esurance.com/info/car/comprehensive-and-collision-coverage