Gap insurance also known as guaranteed asset protection insurance is a type of coverage that helps cover the difference between what you owe on your car loan or lease and the actual cash value of your vehicle if it is totaled or stolen. This type of insurance can be a lifesaver for those who owe more on their vehicle than it is worth as it can prevent them from having to pay out of pocket for a car they no longer have.
Factors that Affect Gap Insurance Cost
There are several factors that can affect the cost of gap insurance. These include –
- Age of the vehicle – Newer vehicles typically have higher gap insurance costs as the depreciation on a new car is steeper in the first few years.
- Loan amount – The larger the loan amount the higher the potential gap between what you owe and the actual cash value of the vehicle.
- Vehicle make and model – Some vehicles hold their value better than others which can impact the cost of gap insurance.
- Driving record – Your driving history can also play a role in the cost of gap insurance as a poor driving record can lead to higher premiums.
How to Save on Gap Insurance Cost
While the cost of gap insurance can vary depending on the factors mentioned above there are a few ways you can potentially save on your premiums –
- Shop around – Like with any type of insurance it’s a good idea to compare quotes from multiple providers to ensure you’re getting the best deal.
- Bundle policies – Some insurance companies offer discounts for bundling multiple policies so consider getting your gap insurance from the same provider that covers your auto insurance.
- Consider a higher deductible – By opting for a higher deductible you may be able to lower your gap insurance premiums.
- Drive safely – Maintaining a clean driving record can help keep your insurance costs down including your gap insurance.
Typical Cost of Gap Insurance
The cost of gap insurance can vary but on average it typically ranges from $200 to $600 per year. This cost can be added to your auto insurance premium or paid separately depending on the provider. Some dealerships also offer gap insurance at the time of purchase but it’s important to compare prices with other providers to ensure you’re getting the best deal.
While gap insurance may add to your overall insurance costs it can provide peace of mind knowing that you won’t be left with a hefty bill if your car is totaled or stolen. Consider the factors that can affect the cost of gap insurance and shop around to find the best option for your needs.
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