Does GAP insurance cover stolen cars?

Gap insurance is a very specific type of coverage that only applies when you need to cover the “gap” between the value of your vehicle and the outstanding balance you owe on the vehicle loan.Does GAP insurance cover theft? If you lease a car or are in the early stages of your vehicle loan, gap coverage can be an inexpensive way to make sure that you are not left to pay additional amounts on your car loan if your vehicle is stolen. If you’re looking for GAP insurance, stolen cars may not be covered. Read on to find out.Enter your zip code above now for car insurance rates from multiple companies in your area!

What is gap insurance?

Gap coverage or insurance is also called guaranteed auto protection. The basis for gap insurance is that as soon as you take the car off of the dealership lot, it begins to depreciate in value.If you are in the beginning stages of paying off a car loan, there is a possibility that your loan obligation will be greater than what the car is currently worth.In the event that you have a total loss on your car, then cap coverage would help make up this difference for you.

Many car dealerships or lending institutions will require that you maintain coverage above what is required under the state minimum amounts.

This is typically referred to as collision and comprehensive insurance. The important thing to remember about these supplemental insurance policies is that they only cover the fair market value of your car.

Free Car Insurance Comparison

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

 Secured with SHA-256 Encryption

When Gap Insurance is a Good Idea

Not every vehicle is a good candidate for gap coverage. It is typically used for vehicles that are financed or leased.Because adding gap insurance with collision coverage and comprehensive insurance only means a small increase in your annual insurance premium, it can be an attractive choice for some drivers.The most common circumstances for getting gap coverage on your car or truck include:

• If you put little to no money down on the purchase of your vehicle and have a high loan payment you may end up owing more than the value of your vehicle in an accident
• If you financed your car for 60 months or longer, you may still have payments to make in the event of an accident
• When you lease your vehicle, you may be required to get gap insurance by the car dealership
• If you purchased a unique vehicle that depreciates faster than average, then gap insurance could be a good idea for you
• If your lender allowed you to roll over a negative equity loan balance from a separate vehicle into a new auto loan, then you should almost certainly take out gap insurance
• If you are considering whether gap insurance is right for you, it is a good idea to speak to your existing insurance agent to find out what is covered under your policy.

You may also be able to get a discount on gap coverage if you are already insured for other policies from that same company.

In addition, it is always a good idea to mention the type of car you are considering buying or leasing when calling around for car insurance quotes to find out if gap coverage is advisable in your situation.

Read more: Do you need GAP insurance on a used car?

Paying for Gap Insurance

When you purchase gap insurance, you are really only trying to cover the gap between the fair market value of your car and the remaining amount left to pay on your car loan.The way that gap insurance is usually billed is by including it in your regular premium.There will come a point when you have closed the gap, meaning you owe very little left on your car loan or the fair market value of your car has not depreciated past what you owe on your loan.

You should request to cancel your gap coverage at this point so that you are not paying for something that you do not need.

In general, gap insurance can cost more when purchased from the car dealership than through a traditional insurance company.Before purchasing gap insurance from the dealership, be sure to call around for quotes on gap insurance coverage to make sure you are getting the lowest rate possible.

Gap Insurance for a Stolen Car or Truck

The FBI reports that a car is stolen every 44 seconds in the U.S. If your car or truck is stolen, the first thing you need to do is call the police and file a claim with your insurance company.Does GAP cover stolen cars? The insurance company will determine what the actual value of your car is and will compare that to what you still owe on your vehicle loan.If you end up still owing more than what the car would be worth, then you are covered for that difference through gap insurance.It is important to act quickly in filing a claim because there may be certain deadlines for notification and reporting under your state’s laws and your insurance policy.Your insurance agent will be able to assist you with the claim process for a stolen vehicle. Be sure to specify and ask if GAP insurance cover stolen cars.

Read more:

• Does car insurance cover stolen wheels and tires?
• How does GAP insurance work after totaling a car?

Free Car Insurance Comparison

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

 Secured with SHA-256 Encryption

Does liability insurance cover a stolen car?

Liability insurance will only cover you if you cause bodily injury or property damage to someone else, but it won’t cover a stolen vehicle.

If I bought my car outright, do I need gap insurance?

There’s no reason to buy this coverage if you bought a car with cash and own it without a loan. It is for when you owe more than the value of your vehicle. If you have the car paid off, and it’s no longer financed, you don’t owe any more than the car is worth, and so there would be no payout from gap coverage.

Is gap insurance worth it?

The answer to this question depends on your situation. Gap insurance may be worth it if you owe a lot more than what the car’s worth.So, for instance, if you bought an $80,000 car and only put down $5,000, you may want to get gap insurance, so you’re not stuck having to make up the difference if an insurer totals your car.If the outstanding loan or lease balance is only slightly more than the vehicle‘s, you may want to chance it. In that case, it’s a good idea to put some money aside in case you need it if an insurer totals your car.You may have to continue paying your lease payments until your insurance claim is completely settled. (For more information, read our “How do I find out if GAP insurance is included in my car lease?“).

Free Car Insurance Comparison

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

 Secured with SHA-256 Encryption

Case Studies: Illustrating the Benefits of GAP Insurance in Real-Life Scenarios

Case Study 1: John’s Stolen Car

John’s car was stolen from his driveway. He immediately filed a police report and contacted his insurance company. The insurance company determined the actual value of the car and compared it to the remaining balance on John’s car loan. Fortunately, John had GAP insurance, which covered the difference between the actual value and the loan amount. This helped John avoid financial loss due to the theft.

Case Study 2: Sarah’s Upside-Down Loan

Sarah purchased a new car with a small down payment and a long-term loan. A few months later, she was involved in an accident, and her car was declared a total loss. Since the car’s value had significantly depreciated, the insurance payout was lower than her remaining loan balance. Luckily, Sarah had GAP insurance, which covered the shortfall and prevented her from being responsible for the remaining debt.

Read more: How do you get the lowest down payment on car insurance?

Case Study 3: Mark’s Leased Vehicle

Mark leased a brand-new vehicle. During the lease term, the car was stolen. Mark reported the theft to the police and his insurance company. The insurance company determined the actual value of the stolen car and compared it to the remaining lease payments. With GAP insurance, Mark was protected from the financial burden of paying for a vehicle he no longer had.

The Bottom Line on Gap Insurance

Gap insurance is typically used when you are upside down on a car loan, which means that you still owe more than what the car is actually worth.If you have gap coverage, it will pay for the difference between the actual value of the car and what you have left to pay on your car loan.As long as your gap insurance policy covers loss in the case of theft, your stolen vehicle will be eligible for coverage under your gap insurance.Comprehensive auto  insurance will cover the loss of your vehicle due to theft otherwise, but this is a supplemental policy that is not typically required under state laws. Contact your auto insurance company for further details.Enter your zip code below to compare car insurance rates from multiple companies at once!

Free Car Insurance Comparison

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

 Secured with SHA-256 Encryption