U-Turn: Understanding Usaa's Auto Insurance Gap Coverage

USAA offers gap insurance as well as auto replacement assistance. Gap insurance is an optional auto insurance coverage that helps pay your car loan if your car is lost or stolen and you owe more than the vehicle is worth. It covers the difference between your car's value and the amount you owe on the loan in the case of a total loss. If you are delivering for an app-based transportation network company, you may need to add rideshare gap coverage to your auto policy.

USAA's car replacement assistance

Gap insurance covers the difference between the actual cash value (ACV) of your vehicle and the amount you still owe on your loan in the event of a total loss claim. The ACV is the estimated retail value of your car on the open market. If your vehicle is financed and you make a total loss claim, your insurance provider will typically pay out up to the ACV of your car. However, if you owe more on your loan than the total value of your car, gap insurance will cover the remaining amount.

For example, if your vehicle is financed and you still owe $10,000 to your lender, but your car is totalled and deemed to have an ACV of $8,000, gap insurance will cover the remaining $2,000 you owe on your loan.

It's important to note that gap insurance and car replacement assistance serve different purposes. Gap insurance is primarily designed to pay off your loan if your car is totalled, while car replacement assistance provides funds for purchasing a new vehicle. Whether you need both types of coverage depends on your financial situation and the value of your vehicle.

USAA rideshare gap coverage

If you are a driver for a ridesharing company like Uber or Lyft, you may need to add rideshare gap coverage to your auto policy. This is because you might not be insured during the "unmatched" time of the delivery, when you are logged on to the rideshare app and waiting for a customer request. This gap in time, which can amount to a few minutes in many cases, may not be covered by your USAA Auto Insurance or your rideshare company's commercial policy.

USAA offers ridesharing gap coverage to protect you during this period. This is a policy add-on that provides protection for the coverage gaps between your personal auto policy and the coverage provided by an app-based transportation network company (TNC) such as Uber or Lyft. Most TNC insurance does not provide coverage for your vehicle while the app is on, but when you are parked and waiting for ride requests. This policy may also help cover the high deductible in the TNC-sponsored policy.

Ridesharing gap coverage is available to USAA members in the following states: Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, District of Columbia, Delaware, Florida, Georgia, Idaho, Iowa, Illinois, Indiana, Kansas, Kentucky, Louisiana, Massachusetts, Maryland, Maine, Minnesota, Missouri, Mississippi, North Dakota, Nebraska, New Hampshire, New Jersey, Nevada, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Dakota, Tennessee, Texas, Utah, Vermont, Washington, West Virginia, Wisconsin, and Wyoming.

Adding ridesharing coverage is a good idea to help protect your ride, safeguard your income, and protect your financial security. You can get guaranteed repairs at more than 2,900 USAA-approved locations nationwide, and tailor your coverage limits and deductibles to fit your needs and budget.

Gap insurance for financed vehicles

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 totaled, providing financial protection for leased or financed vehicles. It 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.

Gap insurance is particularly relevant for people who have not put money down and have chosen a long payoff period since they may owe more than the car's current value. If you finance a vehicle purchase, your lender may require you to have gap insurance for certain types of cars, trucks, or SUVs that may depreciate and lose value at a faster rate, such as luxury sedans or SUVs.

Gap insurance is not required by any insurer or state, but some leasing companies may require you to purchase it. When purchasing a new car, some dealerships may automatically add gap insurance to your loan, but you can decline this coverage.

If you have gap insurance, check your loan balance often and cancel the insurance once you owe less than the book value of your vehicle.

Gap insurance for older vehicles

Gap insurance, or guaranteed asset protection, is an optional form 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 tend to depreciate faster than older vehicles.

When you finance a new or pre-owned vehicle, the bank or lender typically expects you to make monthly payments for an agreed-upon period. If your vehicle is totaled and its value does not cover the remainder of the loan, you will have to pay the balance out of pocket. This is where gap insurance comes in. With most insurance companies, you can add gap insurance if you also have comprehensive and collision policies.

To qualify for gap insurance, you usually have to purchase a policy within two to three years of buying your car. Your vehicle can be pre-owned but typically has to be no more than two to three years old. Some companies only write gap policies for a car's original owner.

Gap insurance covers what is owed on a car after a total loss, whether due to an accident or theft. It is important to note that gap insurance does not cover your comprehensive or collision deductible, which is the amount your insurance subtracts from a claim payout. Additionally, gap insurance does not cover engine failure, bodily injuries, medical expenses, lost wages, or funeral costs.

When deciding whether to purchase gap insurance for an older vehicle, it is essential to consider the age and value of the car, the loan amount, and the potential financial burden in the event of a total loss. While gap insurance can provide valuable protection, it may not be necessary for older vehicles with lower loan-to-value ratios or those that have already undergone significant depreciation.

USAA, which provides insurance for military members and their families, offers gap insurance as part of its rideshare insurance coverage. This type of insurance protects drivers who work for app-based transportation network companies (TNCs) during the "unmatched" time when they are waiting for a rideshare request.

Gap insurance cost

The cost of gap insurance depends on where you buy it. You can either buy it from your insurance company or from the auto dealership where you bought your car.

Gap insurance offered by auto dealerships is more expensive than gap coverage offered by an insurance company. Dealerships and lenders charge higher prices for gap insurance than car insurance companies. Dealers and lenders sell gap insurance for a flat rate, typically between $500 and $700, which are the highest rates for this type of policy. Plus, you will pay interest on the sum since it will be rolled into your loan.

Insurance companies, on the other hand, charge an average of $20 to $40 per year for gap insurance when buyers bundle it into an existing insurance policy. This will only increase your comprehensive and collision insurance cost by about five to six per cent on average, making it a lot more affordable. If you want to buy a standalone gap insurance policy, you can expect to pay between $200 and $300.

The average cost of gap insurance from an insurance company ranges from $35 to $208 per year, and is included as part of your insurance premium. Factors that affect the cost of gap coverage include the value of your vehicle and the depreciation rate.

Gap insurance is typically only necessary during the first two to three years of financing, as those are the years when your auto loan is "upside down", meaning you owe more than the car is worth. A $40,000 Toyota, for example, will see little depreciation and the cost of gap coverage may be $50 or less per year. On the other hand, a $100,000 Range Rover may cost $150 or more per year for gap coverage due to the high cost and quick depreciation rate on these vehicles.

Frequently asked questions