Call Us  |  Dental & Vision  |  Quick Quote ☰ ☰ ˟
Logo
Quick Quote Request Dental & Vision Quote
Call Us: (678) 588-6230
  • Home Page
  • Get A Quote
    • Quick Quote
    • AutomobileImage of right arrow
      • Auto Quote Form
      • Auto Quote (quick and short)
    • Business & CommercialImage of right arrow
      • Commercial Insurance Quote Form
    • DentalImage of right arrow
      • Dental Insurance Quote
    • FarmImage of right arrow
      • Farm Quote
    • FloodImage of right arrow
      • Flood Quote Form
    • HomeownersImage of right arrow
      • Homeowners Quote Form
      • Home Quote Short Form
    • LifeImage of right arrow
      • Life/LTC Quote Form
    • MotorcycleImage of right arrow
      • Motorcycle Quote Form
    • Recreational VehicleImage of right arrow
      • RV Quote Form
    • RentersImage of right arrow
      • Renters Quote Form
    • High Risk Workers CompImage of right arrow
      • High Risk Workers Comp Quote
    • Home & Auto
  • Blog
  • Resources
    • Refer a Friend
    • Important Links
    • Insurance Glossary
  • About Us
    • About Appletree Insurance Agency
    • Testimonials
    • Appletree Insurance Community Involvement
    • Employee Directory
    • Location Map
    • Privacy Policy
  • Contact
Auto Icon

Auto

We browse through a wide variety of coverages and find the right one for you.

Learn More
Home Icon

Home

We browse through a wide variety of coverages and find the right one for you.

Learn More
Business Icon

Business

We browse through a wide variety of coverages and find the right one for you.

Learn More
Life Icon

Life

We browse through a wide variety of coverages and find the right one for you.

Learn More
Farm Icon

Farm

We browse through a wide variety of coverages and find the right one for you.

Learn More
Home > Blog > What is Gap Insurance and How It Can Save You Big
FRIDAY, MARCH 24, 2023

What is Gap Insurance and How It Can Save You Big

Like many things in life, gap insurance is one of those things that is important to know about before you need it. Gap insurance is also commonly referred to as auto loan/lease coverage.

To answer all your questions about this important coverage, we talked with our auto underwriting team for insights.

  1. What is gap insurance?
  2. What's an example of how gap insurance works?
  3. What is the most gap insurance will pay? 
  4. Who might need gap insurance?
  5. How can I buy gap insurance? 

 

1. What is gap insurance?

Gap insurance (or auto loan/lease coverage) is an additional coverage you can add to your car insurance policy. It covers the remaining loan or lease amount you may have on your vehicle if it’s totaled in a covered accident.

So, if your car is damaged in an accident and your insurance company deems it a total loss, your insurance company will pay off your remaining loan balance rather than just the current value of your vehicle considering age, condition and mileage. This loss of value over time is called depreciation.

Read more: Totaled Car? Here’s What You Need to Know and What Happens Next

Without this coverage, you would be responsible for the “gap” (hence its name) between what’s left on your loan and your vehicle’s current, depreciated value.

For example, if your vehicle is totaled in a covered accident, your insurance company will provide you with a claim payout equal to your vehicle’s depreciated value (less any deductible). Depending on the amount of your loan and the depreciation on your specific vehicle, the amount your insurance company pays you may be less than the amount left on your loan. This leaves you having to pay that remaining amount. However, with gap insurance, your insurance company would pay the remaining loan amount.

 

2. What’s an example of how gap insurance works?

what-does-gap-insurance-pay
 

Let’s say your car is totaled after a bad accident. Your car’s current value is $10,000.

You have a loan on this vehicle. Your remaining loan amount is $12,000.

Your insurance company is going to pay you the current value of your car ($10,000).

This leaves a remaining $2,000 balance on your loan, which you will need to pay. If you have auto loan/lease coverage, it may pay the remaining $2,000 for you.

 

3. What is the most gap insurance will pay?

In general, your insurance will pay the lender based on what you owe on your vehicle and the coverages your policy has, but this can vary depending on your claim.

 

4. Who might need gap insurance?

If you either took out a loan to pay for your vehicle or it’s under a lease, you may want to consider gap insurance.

Other factors that may influence your decision include:

  • The amount of principal left on your loan
  • The age of the vehicle
  • Your personal financial situation   

 

5. How can I buy gap insurance?

gap-insurance-totaled-lease-car

To buy gap insurance, you’ll likely need to have a car insurance policy that includes the comprehensive (other than collision) and collision coverages. Most companies will require you have both of these coverages on your vehicle’s policy before they will add an auto loan/lease gap coverage.

We, of course, think that contacting your local, independent insurance agent or your car insurance company is the best first step. Car dealerships do offer gap insurance, but it’s often more expensive than just adding it to your existing car insurance policy.

To start the process of adding auto loan/lease coverage to your car insurance, contact your local independent agent today. 

Posted 3:48 PM

Tags: gap insurance
Share |


No Comments


Post a Comment
Required
Required (Not Displayed)
Required


All comments are moderated and stripped of HTML.

NOTICE: This blog and website are made available by the publisher for educational and informational purposes only. It is not be used as a substitute for competent insurance, legal, or tax advice from a licensed professional in your state. By using this blog site you understand that there is no broker client relationship between you and the blog and website publisher.
Blog Archive
  • 2024
  • 2023
  • 2022
  • 2020

  • home & auto insurance(1)
  • commercial umbrella insurance(1)
  • life insurance(1)
  • storm insurance(1)
  • ga(1)
  • gap insurance(1)
  • auto insurance(1)
  • atlanta(1)

View Mobile Version

Resources

  • Products
  • Customer Service
  • News
  • About Us
  • Refer A Friend
  • Our Carriers
  • Blog
  • Contact Us

logo fb buttonLinkedin icona drawing of a face

Contact Us

525 Clubhouse Drive STE 260
Peachtree City, GA 30269

P: (678) 588-6230 | Fx: 877 613 3301 
E: info@appletree-insurance.com 
© Copyright. All rights reserved. | Powered by Insurance Website Builder