You might be thinking about gap insurance to protect your purchase after buying a new or used car for your commute in Denver. This leads to the question, “how much is gap insurance?”
Gap insurance costs $20 a year when purchased from your current auto insurer. You can purchase a stand-alone gap insurance policy for $200–$300 in place of having the cost added on a yearly basis.
Whether you buy gap insurance through your regular auto insurer or include it in your auto loan will affect the price. Learn more with KV Auto, below! Keep reading.
What is Gap Insurance?
General Asset Protection insurance, or GAP insurance, pays the difference between the value of a car and the remaining balance on the owner’s lease or auto loan in the event that the car is stolen or cannot be repaired following an accident. This is a benefit you can’t get from standard collision and comprehensive insurance policies. Having GAP insurance is not required for drivers. Some states, however, mandate that car dealers give it to their clients. You may want to know: How Long Does It Take to Get Car Insurance?
Average Cost of Gap Insurance
Your gap insurance price will depend on where you purchase your vehicle. Here’s a look at some of the average costs of gap insurance:
- Purchase from your current auto insurer: Typically, this gap insurance costs $20 a year. Read more: Average Cost of Car Insurance
- Add gap insurance onto your car loan: When you add gap insurance to your car loan, it’s added as one lump sum. Depending on the conditions of your loan, the average price for gap insurance in one lump sum ranges from $500 to $700. Explore the answer:How Much is Car Insurance for a 16-year-old, Average Cost of Car Insurance for 18-Year-Olds
- Purchase standalone gap insurance: You can purchase a stand-alone gap insurance policy for $200–$300 in place of having the cost added on a yearly basis. Read more: How Much Does Tesla Insurance Cost?
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Is Gap Insurance Worth It?
When compared to the other options, which can cost anywhere from $200 to as much as $700, gap insurance is fairly inexpensive at $20 per year through your regular insurer, so you might be wondering if it’s really worth it. Here are a few reasons why Aurora drivers might want to get the added coverage:
- If your vehicle is stolen or incurs enough damage in an accident to deem it a “total loss,” gap insurance covers it.
- Gap insurance makes sure you are fully compensated rather than losing out on thousands of dollars if you have an auto loan balance that is higher than the value of your car at the time of the accident.
You may be interested: How Much Does General Liability Insurance Cost?
What Factors Affect GAP Insurance Policy Cost?
Factors that can affect the cost of GAP insurance include:
- Vehicle’s actual cash value (ACV)
- Location
- Vehicle age
- Auto insurance claims history
Read more: How Long Does GAP Insurance Last?
How Does GAP Insurance Work?
Knowing how insurance work is essential. The difference between the car’s current value and the loan balance is covered by GAP insurance. If the car is totaled, the GAP insurance will cover the balance left after your standard insurance has paid for the actual cash value of the vehicle. In this manner, in the event that a car is stolen or totaled, you owe the lender nothing. Check for How to Get Car Insurance Before Buying a Car?
Who Needs GAP Insurance?
The following people may benefit from GAP insurance:
- People Who Paid a Small Down Payment on Car Loan
If you only made a small down payment on your car loan, increasing the balance owed on the vehicle, you may be able to obtain GAP insurance.
- Lessees
Since leases typically have lower monthly payments than auto loans and a wider difference between the balance due and the vehicle’s actual value, many auto leases include GAP insurance.
- Sports Car Owners
In the event of a serious accident or theft, GAP insurance can help cover the difference between the actual value of the car and the amount you still owe on it if your car depreciates quickly.
- Drivers Whose Auto Financing Covers Other Products
If your auto loan includes coverage for additional items like an extended service contract or debt from previous auto loans, you can still purchase GAP insurance. These additions raise your debt without decreasing the value of your car, so you might want to think about getting GAP insurance to make up the difference. Full coverage car insurance is a great choice especially choosing car insurances.
- Owners of a Vehicle with High Mileage
High mileage cars will lose value more quickly than you can pay off the loan. According to WalletHub, purchasing GAP insurance will protect you from low equity. Check for What Age Does Car Insurance Go Down?
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FAQs
Does Gap Insurance Cover Theft?
Yes. If you’re a victim of car theft, gap coverage will pay out the difference between your comprehensive coverage and your car’s value.
Does Gap Insurance Cover Me If My Car is Not Totaled?
No, gap insurance only becomes relevant in cases where fixing your car is either impossible or prohibitively expensive.
How Much is Gap Insurance Per Month?
Regarding gap insurance, the cost will vary depending on which auto insurance provider you choose. You could reasonably expect to pay about $5 to $20 a month for gap insurance.
What is the Gap Insurance Cost at the Dealer?
Gap insurance, when bought from the dealer, can cost several hundred dollars or more; this cost is spread out over the course of your loan payments and is consequently subject to interest. Why is Car Insurance So Expensive?
Summary: How Much is Gap Insurance?
Gap insurance costs $20 a year when purchased from your current auto insurer. You can purchase a stand-alone gap insurance policy for $200–$300 in place of having the cost added on a yearly basis.
The price of gap insurance is typically justified by the additional peace of mind it provides, regardless of whether you actually use it, due to its low cost and distinctive coverage. If your car is totaled in an accident or stolen, gap insurance will pay the difference between the value of your car and the amount still owed on your loan.
If you have any questions, please leave a comment. KV Auto tries to give you the best car industry information. Thank you for reading.
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