Question 1

What does gap insurance mean?

Accepted Answer

Gap stands for guaranteed asset protection, which helps pay off the remainder of your car loan if you total your vehicle.

Question 2

Can I purchase gap insurance by itself?

Accepted Answer

You can get stand-alone gap insurance from some dealerships and lenders when you buy a new car. However, you&#8217;ll need to purchase gap coverage from your insurance company if you can find a stand-alone gap insurance provider.

Question 3

What does gap insurance do?

Accepted Answer

Gap coverage protects you from paying the remainder of an upside-down loan. For example, if your car is declared a total loss and you owe more on your loan than the vehicle is worth, gap insurance kicks in and pays what’s left.

Question 4

Should you buy gap insurance after you buy a car?

Accepted Answer

While having coverage will never hurt, it’s not needed for everyone. If you put more than 20% down on your loan, or you’ll pay your loan off in less than five years, you might be able to skip gap coverage.

Question 5

How do you get gap coverage?

Accepted Answer

There are two simple ways to get gap coverage. The easiest is to ask your insurance company if it can add the coverage to your policy. Alternatively, you might be able to buy gap coverage through the dealership where you purchase or lease your car.

Question 6

Can you buy gap coverage anytime?

Accepted Answer

There are restrictions on when you can buy gap coverage. Usually, you can only purchase gap if you’re the first owner of a car, and you typically need to buy it within 30 days of purchasing your vehicle.
If you’re interested in gap coverage for a used car or missed the 30-day window, consider loan-lease insurance.

Question 7

Do you need gap insurance?

Accepted Answer

Whether you need gap insurance or not depends on your situation. If you owe more on your car than it’s worth, gap coverage offers valuable protection. However, you don&#8217;t need gap insurance if you don’t mind the risk of having to pay off an upside-down loan.

Question 8

Are gap insurance and full coverage the same?

Accepted Answer

Gap coverage is an optional add-on you can buy for your car insurance policy and is not the same as full coverage. Full coverage refers to a car insurance policy that includes collision, liability, comprehensive, uninsured/underinsured motorist, and medical payments or personal injury protection.

Question 9

Is gap insurance required for a new car?

Accepted Answer

If you’re leasing a car, you’ll likely have to have gap coverage. However, your lease will likely include gap coverage automatically. Gap coverage is not required if you’re financing a car, but it is recommended until you pay your loan down.

Question 10

Can you drop gap insurance?

Accepted Answer

Unless otherwise specified in your loan or lease agreement, you can drop gap coverage from your insurance whenever you’d like. If your loan or lease includes gap coverage, you’ll probably pay for it while you make payments on your car.

Question 11

Do you get money back from gap insurance?

Accepted Answer

You might receive a refund for the unused portion if you pay off your car loan early. Likewise, if you have gap coverage on your insurance policy and paid in full, you’ll probably get a refund for the portion you already paid for but didn’t use.

Question 12

How do you know if you have gap insurance?

Accepted Answer

To determine if you already have gap coverage, look at your loan or lease agreement or check your insurance policy. If you’re having trouble determining if you have coverage, you can always contact an insurance or dealership representative for help.

Question 13

Does gap insurance cover theft?

Accepted Answer

Gap insurance itself does not cover theft — that’s what comprehensive insurance is for. However, your insurance company will declare your car a total loss if the vehicle is stolen. At that point, gap insurance will help pay any remainder of your car loan.

Question 14

How long does gap insurance last?

Accepted Answer

If you buy gap coverage through a dealership, it will last the entirety of your loan or lease. For gap coverage added to an insurance policy, you can cancel whenever you’d like. The best time to cancel gap is when the amount left on your car loan is less than your car’s ACV.

Question 15

Which companies sell gap coverage?

Accepted Answer

While gap coverage is affordable and valuable protection, not all insurance companies offer it. Some companies that offer gap coverage include Allstate auto insurance, Nationwide, Liberty Mutual, and Travelers. However, availability may vary depending on your location and specific insurance company.

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