Geico Auto Gap Insurance: Filling The Coverage Gap

Gap insurance is an optional type of car insurance that covers the difference between what you owe on your car loan and the depreciated value of your vehicle if it's totaled. While GEICO does not offer gap insurance, it is available from other major insurance companies, car dealerships, and auto loan lenders.

What is gap insurance?

Gap insurance is an optional, additional type of car insurance that covers the difference between the amount you owe on your car loan and the depreciated value of your vehicle if it is stolen or declared a total loss. This type of insurance is designed to provide financial protection for leased or financed vehicles.

Gap insurance is typically purchased for leased or financed vehicles. If your vehicle is stolen or written off, your standard auto insurance policy will reimburse you for its current market value, which could be less than the amount you owe on the loan. Gap insurance would cover that difference.

For example, imagine you've purchased a car for $30,000 and taken out a loan to finance it. A year later, the car is in an accident, and your insurance company determines its current market value to be $22,000 due to depreciation. However, you still owe $28,000 on your loan. In this case, gap insurance would cover the $6,000 difference between your remaining loan balance and the insurance payout, ensuring you're not left with the burden of paying off a loan for a car you no longer have.

Gap insurance is widely available from various insurance companies, car dealers, lenders, finance companies, banks, credit unions, and specialised providers. It is typically optional, with flexible terms that can be written to cover your vehicle and loan. The cost of gap insurance depends on the anticipated maximum gap the policy would cover. On average, adding gap coverage to your car insurance costs $89 per year, but it can be purchased for as little as $20-$40 per year from some providers.

Does Geico offer gap insurance?

No, Geico does not offer gap insurance. However, you can purchase gap insurance from a dealership or a standalone company. If you are a current Geico customer and want to maintain your policy, you could buy gap insurance from a third party. Nevertheless, dealership gap insurance is often the most expensive option, as it is usually rolled into your loan and charged interest.

Gap insurance is a type of auto insurance typically purchased for leased or financed vehicles. It covers the difference between what you owe on your car loan and the depreciated value of your vehicle if it is totaled. For example, if you owe $28,000 on a car loan and your car is totalled, with its market value being $22,000, gap insurance would cover the $6,000 difference.

If you are considering gap insurance, you should talk to a Geico representative to determine if their offerings align with your needs without the need for gap coverage.

How does gap insurance work?

Gap insurance is an optional type of auto insurance that covers the difference between what you owe on your car loan and the depreciated value of your vehicle if it's stolen or totaled. It is typically purchased for leased or financed vehicles. If your vehicle is totaled, your standard auto insurance policy will reimburse you for its current value, which could be less than the amount you owe on the loan. Gap insurance would cover that difference.

For example, imagine you've purchased a car for $30,000 and financed it with a loan. A year later, the car is in an accident, and your insurance company determines its current market value to be $22,000 due to depreciation. However, you still owe $28,000 on your loan. In this scenario, gap insurance would cover the $6,000 difference between your remaining loan balance and the insurance payout, ensuring you're not left with the financial burden of paying off a loan for a car you no longer have.

Gap insurance is designed to cover the difference between the outstanding balance on your car loan and the depreciated value of your vehicle if it's declared a total loss. It only steps in when your standard auto insurance settles for the current market value, which might be insufficient to cover your remaining loan amount.

It's important to note that gap insurance does not cover vehicle repair costs, the cost of a rental car while your car is in the repair shop, or damage to someone else's property. It is also not necessary if the actual value of your car is greater than the amount you owe.

To qualify for gap insurance, you must have comprehensive and collision coverage on your policy. Additionally, gap insurance is usually only available if you are the original loan or leaseholder on a new vehicle, but it may be offered for certain used vehicles as well.

When considering gap insurance, it's important to shop around and compare prices and coverage from different providers. You can purchase gap insurance from your auto insurance company, the dealer you purchased the vehicle from, or a standalone gap insurance company. However, adding it to your existing auto insurance policy is typically the cheapest option.

When do I need gap insurance?

Gap insurance is a good option for drivers who:

• Owe more on their car loan than the car is worth. If you are currently making car loan payments, be sure to calculate the loan balance and weigh it against your car’s current cash value.
• Have a car loan that requires gap insurance. Some loan providers require gap insurance from the outset of your loan.
• Have a car lease that requires gap insurance. Some lease providers may already include gap insurance in the price of the lease.

You may not need gap insurance if:

• You own your car outright.
• You owe less on your car than its current actual cash value.
• You made a down payment of at least 20% on the car when you bought it.
• You’re paying off the car loan in less than five years.
• The vehicle is a make and model that historically holds its value better than average.

Gap insurance is typically only available if you are the original loan or leaseholder on a new vehicle, but you may be able to obtain it for certain used vehicles.

Is gap insurance worth it?

Gap insurance is an optional, add-on type of car insurance that covers the difference between what you owe on your car loan and the depreciated value of your vehicle if it's totaled, providing financial protection for leased or financed vehicles. It is not necessary for every driver, but it can be a good idea in certain situations.

If the potential gap between your car loan balance and your car's value is a concern, gap insurance may be worth considering. This type of coverage is typically only available if you are the original loan or leaseholder on a new vehicle, but it may also be available for certain used vehicles. Gap insurance is generally recommended if you:

• Made a small down payment (less than 20% of the car's value)
• Have a long finance period (longer than two years)
• Drive more than the average person in your area
• Are leasing your car
• Own a car that depreciates faster than other cars
• Have a loan or lease agreement that requires gap coverage

If you made a down payment of at least 20% of the car's value, expect to pay off your car loan in less than five years, or financed or leased a vehicle that holds its value, then gap insurance may not be necessary. Additionally, if the actual value of your car is greater than the amount you owe, then gap insurance may not be worth the extra cost.

The cost of gap insurance varies depending on several factors, including the current value of your car, your location, and your previous car insurance claims history. On average, adding gap coverage to your car insurance costs $89 per year, but it can range from $20 to $40 per year when added to an existing policy, or $200 to $300 when purchased independently. If bought from a lender or dealership, it can cost a flat fee of $500 to $700 on average.

Where can you buy gap insurance?

You can purchase gap insurance from several major insurance companies, including State Farm, Nationwide, Progressive, Allstate, USAA, and AAA. You can also buy it from your car dealership or lender, but this option tends to be more expensive as it is added to your loan payments with interest.

Frequently asked questions