Allstate: Gap Insurance Coverage

Allstate offers Guaranteed Asset Protection (GAP) insurance, which covers what you owe on your vehicle loan or lease in the event of a total loss before it is paid off. GAP insurance waives the difference between your primary auto insurance settlement and the outstanding balance owed on your vehicle on the date of the loss. This type of insurance is useful if your vehicle is stolen and not recovered, or totaled in an accident or other vehicle mishap, as it can save you from incurring out-of-pocket costs if you owe more on your car than it is worth. Allstate's GAP insurance is available for vehicles valued or financed up to $150,000 and provides reimbursement of up to $1,000 for your primary auto insurance deductible.

Allstate's Guaranteed Asset Protection (GAP) program

The GAP program from Allstate provides protection for new and used vehicles valued or financed up to $150,000. It reimburses you for your primary auto insurance deductible up to $1,000 and waives covered losses up to $50,000. It covers both personal and many light-duty commercial uses under the same GAP waiver.

GAP insurance is generally offered for newer vehicles, usually those that are brand new or no more than a year old. It is different from new car replacement coverage, which covers the cost of a new model of your totaled car. GAP insurance, on the other hand, helps clear any negative loan balance if your vehicle is totaled.

While GAP insurance is not a legal requirement, it is often considered a wise choice for those financing a new or nearly new vehicle. It is important to note that GAP insurance is not meant for covering repair costs but is specifically designed for cases where your car is considered a total loss.

In terms of pricing, Allstate suggests GAP coverage for those who have paid less than 20% upfront for their vehicle, have auto loans extending 60 months or more, or are leasing their vehicle.

GAP insurance for newer vehicles

GAP insurance, or guaranteed asset protection, is an optional type of insurance coverage that pays the difference between what your vehicle is worth and how much you owe on your car loan at the time it is stolen or totaled. This type of insurance is particularly useful for newer vehicles, which depreciate in value the moment they leave the car lot. In fact, most cars lose 20% of their value within the first year.

If your new car is totaled in an accident, a full-coverage car insurance policy will only cover up to the vehicle's current market value. GAP insurance covers the difference between what a vehicle is currently worth (which your standard insurance will pay) and the amount you actually owe on it. This means that if you still owe money on your car loan after your vehicle has been totaled, GAP insurance can help cover the remaining cost.

GAP insurance is not necessary for all drivers. If you do not have a car loan or lease, then you do not need GAP insurance. However, if you have leased a vehicle or are still making loan payments, GAP insurance may be a good idea. This is especially true if:

• You made less than a 20% down payment
• You financed for 60 months or longer
• You leased the vehicle (as GAP insurance is generally required)
• You purchased a vehicle that depreciates faster than average
• You rolled over negative equity from an old car loan into a new loan

Where can I get GAP Insurance?

You can typically buy GAP insurance from car insurance companies, banks, and credit unions. It is also sometimes offered by car dealerships, but this option tends to be more expensive in the long run as you will be paying interest on the cost of the GAP insurance over the life of the loan.

According to the Insurance Information Institute, auto insurers typically charge a few dollars a month or around $20 a year for GAP insurance. However, lenders charge a flat fee of around $500 to $700 for GAP insurance, and this cost will also include interest if added to your loan.

GAP insurance vs new car replacement coverage

Allstate does offer Guaranteed Asset Protection (GAP) insurance. This type of insurance covers what you owe on your vehicle loan or lease if you experience a total loss before it's paid off. GAP insurance waives the difference between your primary auto insurance settlement and the outstanding balance owed on your vehicle on the date of the loss.

Now, what's the difference between GAP insurance and new car replacement coverage?

New car replacement coverage pays for the full cost of a new car of the same make and model if your car is stolen or totalled. This type of insurance is typically only available for the first year of car ownership, as a car loses value very quickly. It is also not required when financing a car.

On the other hand, GAP insurance covers the balance left on a loan or lease, ensuring that you can pay off your vehicle loan. GAP insurance is in effect for the length of the car lease or auto loan. It is often required by lenders or lessors.

While new car replacement coverage provides more comprehensive protection, GAP insurance is a more widely offered coverage. Both types of insurance are relatively inexpensive, typically costing around $20 to $40 per year.

When to use GAP insurance

Guaranteed Asset Protection (GAP) insurance is an optional add-on product that covers the difference between the amount you owe on your auto loan and the amount your insurance company pays out if your car is stolen or deemed a total loss. It is designed to protect you from depreciation, which occurs as soon as you buy your car and its value starts to decrease.

• When you lease a car: GAP insurance is often required by lenders when you lease a vehicle. This is because, when you lease a car, you don't own it, and the leasing company may require GAP coverage to protect their investment.
• When you make a lower down payment on a new car: If you put down less than 20% of the sale price as a down payment, you may quickly find yourself in a situation of negative equity. GAP insurance can help protect you from this, even if you're buying a used car.
• When you have a longer financing term: The longer your financing term, the higher the chances that you will owe more on your vehicle than it is worth. GAP insurance can provide valuable protection in this case.
• When you want protection against depreciation: Some cars depreciate faster than others. By calculating the average depreciation rate for your car, you can determine if GAP coverage is a good idea.
• When you have a loan rollover: If you owe more on your loan than your car is worth when it's time to renew, GAP insurance can protect you from negative equity.

It's important to note that GAP insurance is not mandatory, and you can decline it if offered. Additionally, you can purchase GAP insurance through your auto insurer or dealer, but buying it through your insurer may be a more cost-effective option.

How to claim GAP insurance

Allstate does offer Guaranteed Asset Protection (GAP) insurance. This type of insurance covers the difference between your car's actual cash value and your remaining loan or lease balance if the vehicle is stolen or totaled. The cost of Allstate GAP insurance is approximately $20 per six-month policy, and it is usually a better investment than purchasing this coverage from a dealership.

To claim GAP insurance from Allstate, follow these steps:

• Review your policy: Familiarize yourself with the terms and conditions of your GAP insurance policy. Understand what is covered and what your responsibilities are in the event of a claim.
• Report the incident: Contact Allstate as soon as possible after the incident. Provide them with the details of what happened and any relevant documentation, such as police reports or repair estimates.
• Provide vehicle information: Have your vehicle's information ready, including the make, model, year, and vehicle identification number (VIN). Allstate will need this information to process your claim.
• Submit the necessary documents: Gather and submit all the required documents for your claim, such as proof of ownership, loan or lease documentation, and any other relevant records.
• Wait for the claim to be processed: Allstate will review your claim and may send an adjuster to assess the vehicle. This process can take some time, so be patient and provide any additional information or documentation they may request.
• Receive the payout: If your claim is approved, Allstate will pay the difference between your primary auto insurance settlement and the outstanding balance owed on your vehicle on the date of the loss.

It's important to note that GAP insurance typically takes 5-45 days to pay the policyholder after a claim is filed. Additionally, the vehicle must be declared a total loss, and the insurance company needs to accept the claim for the payout to be released.

Frequently asked questions