Family Car Gap: Is Your Coverage Enough?

American Family Insurance offers gap insurance, also known as loan/lease payoff coverage. This type of insurance helps cover the difference between the actual cash value of a totalled car and the policyholder's loan or lease balance. It is important to note that American Family's loan/lease coverage has a maximum payout of 25% of the vehicle's value and does not cover deductibles, extended warranties, or balances from previous loans. The cost of this coverage ranges from $5 to $15 per month and can be purchased separately or added to an existing policy.

American Family offers gap insurance

Yes, American Family offers gap insurance, also known as loan/lease payoff coverage. This type of insurance is an optional add-on to your auto coverage and can give you peace of mind when you buy a new car. It helps protect you from unexpected losses and covers the difference between your car's value and what you still owe your lender if it's totaled or stolen. This is especially important as a car's value can depreciate quickly, sometimes by as much as 20-30% in the first year alone, while your loan amount remains the same.

American Family's gap insurance can be a better investment than dealership gap insurance as it is not rolled into your loan and charged interest. It costs $5-$15 per month and does not pay for your deductible, extended warranties, or any balance rolled over from previous loans. Fault is not a factor in loan/lease coverage payouts.

To add gap insurance to your policy or to get a quote, contact an American Family Insurance agent.

It's called loan/lease payoff coverage

American Family Insurance offers a type of gap insurance called loan/lease payoff coverage. This type of insurance helps cover the difference between a car's actual cash value and the policyholder's loan or lease balance in the event that the car is stolen or totaled. This is important as cars can depreciate quickly as soon as they are driven off the lot, leaving the owner "upside down" or "underwater" on their loan, meaning they owe more than the car is worth.

Loan/lease payoff coverage is an optional add-on to your auto coverage and costs $5-$15 per month. It is important to note that this type of coverage does not pay for your deductible, extended warranties, or any balance rolled over from previous loans. It also will not cover overdue loan/lease payments at the time of the loss or financial penalties imposed for excessive loss, abnormal wear and tear, or high mileage.

Loan/lease coverage is usually a better investment than purchasing gap insurance from a dealership, where the cost is often rolled into your loan and charged interest. Fault is also not a factor in loan/lease coverage payouts.

It helps cover the difference between a car's value and loan balance

When you buy a new car, it starts to depreciate in value the moment it leaves the car lot. In fact, most cars lose 20% of their value within a year. Standard auto insurance policies cover the depreciated value of a car, meaning they pay the current market value of the vehicle at the time of a claim. This is known as the "fair market value".

However, if you've only made a small down payment on the car, it's possible that in the early years of ownership, the amount of the loan will exceed the market value of the car. In this case, if your car is stolen or written off in an accident, standard insurance will not cover the full cost of the loan. This is where gap insurance comes in.

Gap insurance is an optional product that covers the difference between the amount you owe on your auto loan and the amount the insurance company pays if your car is stolen or written off. It helps cover the difference between a car's value and the loan balance. It is important to note that gap insurance will only cover this difference if the loan balance is higher than the value of the vehicle. If you owe less than the value of the car, gap insurance is not necessary.

For example, let's say you buy a car for $30,500. You make a $500 down payment and take out a $30,000 loan with monthly payments of $400. Four months later, you get into an accident and your car is written off. Your insurance company decides the actual cash value of the vehicle, or its fair market value, is $26,000. They will pay this amount (minus your $500 deductible) through your insurance policy's collision coverage. However, you still owe $29,500 on the loan, leaving a gap of $3,500. Without gap insurance, you would be responsible for paying this difference. With gap insurance, you may only be responsible for the deductible, as the insurance company may also cover the remaining $3,000.

American Family Insurance offers a type of gap insurance called loan/lease payoff coverage. This coverage costs $5-$15 per month and will help cover the difference between a totaled car's actual cash value and the policyholder's loan or lease balance, up to a maximum of 25% of the vehicle's value. It's important to note that this coverage does not pay for your deductible, extended warranties, or any balance rolled over from previous loans.

It costs $5-$15 per month

American Family Insurance offers gap insurance, which is called loan/lease payoff coverage. This type of insurance helps cover the difference between a totalled car's actual cash value and the policyholder's loan or lease balance. It is important to note that this type of coverage will only pay up to a maximum of 25% of the vehicle's value towards the difference.

The cost of American Family's loan/lease payoff coverage is $5-$15 per month. This is a relatively low cost compared to other insurance providers and is a great option for those looking for affordable gap insurance. This price range is also competitive when compared to the cost of purchasing gap insurance from a dealership, where the cost is often rolled into the loan and charged interest.

When considering whether to purchase gap insurance from American Family Insurance, it is important to understand what is not covered by their loan/lease payoff coverage. This type of policy does not pay for the policyholder's deductible, extended warranties, or any balance rolled over from previous loans. Additionally, fault is not a factor in loan/lease coverage payouts.

It is always recommended to review the terms and conditions of any insurance policy before purchasing. It is also a good idea to shop around and compare prices and coverage options from different providers before making a decision.

It's usually a better investment than dealership gap insurance

When buying a new car, gap insurance is an optional add-on that can help protect you from unexpected losses. It covers the difference between your car's value and what you still owe to your lender if it is stolen or involved in an accident and declared a total loss.

Gap insurance is particularly useful if you have a large car loan or you bought a vehicle that depreciates quickly. It is usually a better investment to get gap insurance from an insurance company rather than a dealership. This is because the cost of dealership gap insurance is often rolled into your loan, which means you will be paying interest on it. Additionally, you will lose the flexibility to cancel the gap insurance as it is tied to your loan. Dealership gap insurance can therefore end up costing you more in the long run.

American Family Insurance offers a type of gap insurance called loan/lease payoff coverage, which costs $5-$15 per month. This is a better investment than dealership gap insurance as it does not charge interest and you have the flexibility to cancel it.

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