State Farm does not offer traditional standalone Guaranteed Asset Protection (GAP) insurance. However, the company does provide a program with the same basic structure called Payoff Protection or Payoff Protector. This program is available to customers who finance their car with State Farm Bank and covers the difference between the amount paid out by insurance and the outstanding loan balance in the event of a total loss or theft.
Characteristics | Values |
---|---|
What is GAP insurance? | Guaranteed Asset Protection (GAP) insurance covers the difference between the remaining value of your vehicle loan or lease and your vehicle’s actual cash value at the time of the incident. |
Does State Farm offer GAP insurance? | State Farm does not offer traditional standalone GAP insurance. |
What does State Farm offer? | State Farm offers a program with the same basic structure called Payoff Protection or Payoff Protector. |
Who is eligible for State Farm's Payoff Protection? | Customers who do their car financing with State Farm Bank. Cars used as collateral for a State Farm loan are also covered. |
What does Payoff Protection cover? | The amount you still owe on the vehicle after the initial insurance payouts are made. |
What You'll Learn
- State Farm's Payoff Protector benefit is similar to GAP insurance
- GAP insurance covers the difference between the remaining value of your vehicle loan and its actual cash value
- GAP insurance is worth it if you have a new vehicle with a large outstanding loan balance
- GAP insurance is not offered by State Farm as a standalone product
- State Farm GAP insurance is only available to customers with an active auto insurance policy with the company
State Farm's Payoff Protector benefit is similar to GAP insurance
State Farm does not offer GAP insurance in the traditional sense. Instead, it offers a program with the same basic structure called Payoff Protection or Payoff Protector. This program is available to customers who finance their car with State Farm Bank. Cars used as collateral for a State Farm loan are also covered.
The Payoff Protector benefit covers the difference between the amount your auto insurance pays on a total loss claim and the outstanding principal balance due on your loan. This is subject to certain restrictions. For example, your loan must be in good standing for the benefit to apply.
Payoff Protector is not an insurance product. It is only available to auto loan borrowers with State Farm.
In summary, State Farm's Payoff Protector benefit is similar to GAP insurance.
Switching Auto Insurance While on Loan
You may want to see also
GAP insurance covers the difference between the remaining value of your vehicle loan and its actual cash value
When you buy a new car, it starts to depreciate in value as soon as it leaves the car lot. In fact, most cars lose 20% of their value within the first year. Standard auto insurance policies cover the depreciated value of a car, which is its current market value at the time of a claim. This means that in the event of an accident in which your car is badly damaged or totaled, standard insurance will pay what the vehicle is currently worth, not what you owe on it.
This is where Guaranteed Asset Protection (GAP) insurance comes in. GAP insurance covers the difference between the remaining value of your vehicle loan and its actual cash value. In other words, it covers the loss you would suffer if your loan balance is higher than the value of the vehicle. For example, if you buy a $40,000 car and two years later, it's in an accident and declared a total loss, the market value of your car may be $22,000, but you still owe $26,000 on your loan. The $4,000 "gap" is money you would still owe your lender, so GAP insurance pays off that difference.
GAP insurance is an optional product that you can purchase when buying or leasing a car. It is often offered by car dealers, but your auto insurance company or direct lenders may also offer GAP policies. It is important to compare prices and coverage before purchasing GAP insurance, as rates and coverage can vary.
State Farm Bank® offers Payoff Protector®, which is included with every vehicle loan originated with the bank. Payoff Protector provides financial protection if your car is totaled or stolen and the insurance settlement amount does not cover the outstanding principal balance due on your loan. It covers the difference between the amount your auto insurance pays on a total loss claim and the outstanding principal balance due on your loan, subject to certain restrictions.
Insurance Coverage: Driver or Car?
You may want to see also
GAP insurance is worth it if you have a new vehicle with a large outstanding loan balance
Yes, State Farm offers GAP insurance, also known as Guaranteed Asset Protection insurance. This type of insurance is worth considering if you have a new vehicle with a large outstanding loan balance.
GAP insurance is especially useful if you have a long-term loan, such as 60 months or more, and have made a down payment of 20% or less. In these cases, the depreciated value of your vehicle will likely be less than the loan amount you still owe. GAP insurance can also be beneficial if you have bought a new car that depreciates quickly, and your payments don't reduce the loan as fast as the declining value of the car.
Here's how it works: let's say you buy a $40,000 car. Two years later, you're in an accident, and your car is declared a total loss. The market value of your car at this point may be $22,000, but you still owe $26,000 on your loan. That $4,000 "gap" is where GAP insurance comes in—it pays off the difference so you're not left with debt.
State Farm's Payoff Protector® is included with every vehicle loan originated with State Farm Bank and offers similar financial protection. If your car is totalled or stolen, and your insurance settlement doesn't cover the outstanding balance, the difference between the amount your auto insurance pays and what you still owe is cancelled, subject to certain restrictions.
Geico Auto Insurance: Is Massachusetts Covered?
You may want to see also
GAP insurance is not offered by State Farm as a standalone product
State Farm does not offer traditional GAP stand-alone insurance. However, the company does offer a program with the same basic structure called Payoff Protection. This program is available for customers who do their car financing with State Farm Bank. Cars used as collateral for a State Farm loan are also covered.
Payoff Protection will cover the amount you still owe on the vehicle after the initial insurance payouts are made. For example, if you received a $45,000 payout for your car but took out a loan for $50,000, Payoff Protection will pay the remaining $5,000.
To maintain eligibility, you must have a loan in good standing. Eligibility for this program may also be impacted by your location.
State Farm GAP insurance is also known as Payoff Protection. It can be worth the investment if you have a newer car with a large outstanding loan balance. This coverage can net you significant savings in the event of a total loss or theft. You may also want GAP insurance if you are very worried about having an accident or if you have a State Farm-sponsored loan.
Vehicles must meet qualification standards for State Farm GAP insurance, and the insurance may sometimes be required.
Georgia Auto Insurance: Why So Expensive?
You may want to see also
State Farm GAP insurance is only available to customers with an active auto insurance policy with the company
State Farm offers GAP insurance, also known as Payoff Protection, to its customers. However, this insurance is only available to those who have an active auto insurance policy with the company. This means that only customers who have financed their car with State Farm Bank or have a State Farm-sponsored loan are eligible for this coverage.
Payoff Protection acts as a supplement to a customer's primary insurance. In the event of a total loss or theft, it covers the remaining loan amount owed to State Farm after the customer receives a settlement or payout from their insurance company. This can result in significant savings for customers with newer cars and large outstanding loans.
While State Farm does not offer traditional standalone GAP insurance, its Payoff Protection program provides similar benefits to customers who meet the eligibility criteria. This includes having a loan in good standing and, in some cases, may be influenced by the customer's location.
By offering Payoff Protection, State Farm provides its customers with peace of mind and financial protection in the event of a total loss or theft of their vehicle.
Auto-Owners Insurance: Is It Worth It?
You may want to see also
Frequently asked questions
Guaranteed Asset Protection (GAP) insurance covers the difference between the remaining value of your vehicle loan or lease and your vehicle’s actual cash value at the time of an incident.
State Farm does not offer traditional standalone GAP insurance. However, they do offer a program with the same basic structure called Payoff Protection or Payoff Protector.
Payoff Protection is available for customers who do their car financing with State Farm Bank. Cars used as collateral for a State Farm loan are covered as well. The program will offer coverage for car accidents or theft.
GAP insurance is particularly useful if you have a loan or lease on a new vehicle. It can also be helpful if you are very worried about having an accident or if you have a State Farm-sponsored loan.
At times, the cost of GAP insurance may outweigh the benefits, especially if the policy has limitations or if you are disqualified from coverage.