Average Cost Of Gap Insurance Per Month

What is Gap Insurance?

Gap insurance is a type of automobile insurance that covers the difference between the amount an individual has on the existing car loan and the amount the insurance company pays out in the event of a total loss. This type of insurance is generally used when the individual has put a down payment on the car, or when the car has been financed with a loan. Gap insurance is also known as loan/lease gap coverage, and it is important to understand how it works and what it covers.

How Does Gap Insurance Work?

When an individual takes out a loan to purchase a new car, it is possible that the car may be totaled in an accident or stolen. If this happens, the insurance company will usually only pay out the depreciated value of the car, and the individual may be left with a loan balance that is higher than the amount the insurance company pays out. This is where gap insurance comes in. Gap insurance pays the difference between the loan balance and the amount the insurance company pays out, thus allowing the individual to pay off the loan in full.

What Does Gap Insurance Cover?

Gap insurance typically covers the difference between the actual cash value of the car and the amount left on the loan. It is important to note that gap insurance does not cover any additional expenses, such as sales tax, title fees, or registration fees. Gap insurance also does not cover any costs related to repairs to the vehicle or rental car costs. Additionally, gap insurance does not pay any payments on the loan, nor does it cover any deductible or other costs associated with a claim.

Average Cost Of Gap Insurance Per Month

The cost of gap insurance will vary depending on the type of car, the loan amount, and the amount of coverage purchased. Generally, gap insurance can range from a few hundred dollars to a few thousand dollars per year. Most companies will offer discounts for multiple drivers or vehicles, and the cost of gap insurance can be reduced by signing up for automatic payments or taking advantage of discounts offered by the insurance provider.

Do I Need Gap Insurance?

Gap insurance is not required by law, however, it can be a wise decision for those who are financing a new car or making a large down payment on a new vehicle. Those who are financing a car and have put a large down payment on it may be at risk of having a loan balance higher than the actual cash value of the car if it is totaled or stolen. Gap insurance can provide peace of mind and security in the event of a total loss.

Conclusion

Gap insurance is a type of auto insurance that can be beneficial for those who are financing or leasing a car. Gap insurance covers the difference between the loan balance and the amount the insurance company pays out in the event of a total loss. The cost of gap insurance will vary depending on the type of car, the loan amount, and the amount of coverage purchased. Gap insurance is not required by law, however, it can be a wise decision for those who are financing a new car or making a large down payment on a new vehicle.