Rachael Brennan has been working in the insurance industry since 2006 when she began working as a licensed insurance representative for 21st Century Insurance, during which time she earned her Property and Casualty license in all 50 states. After several years she expanded her insurance expertise, earning her license in Health and AD&D insurance as well. She has worked for small health in...

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Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

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Reviewed by Jeffrey Johnson
Insurance Lawyer

UPDATED: Jul 14, 2021

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Here's what you need to know...

  • Gap insurance is meant to guarantee coverage that your standard car insurance does not offer
  • Gap insurance will sometimes cover the cost of theft, but only if you are not negligent
  • You could have to pay out-of-pocket if you do not know what your gap insurance policy will cover

Many people who are shopping for auto insurance consider purchasing what is known as gap insurance. Gap insurance was designed to pay for damages that the insurance does not cover.

It is convenient to carry this type of insurance because it allows you to know that your damages will be paid for, even if your current insurance is not enough.

However, it is very important to understand what your gap insurance covers so that you will not be out money due to the policy not covering what you thought it did.

Start comparison shopping by entering your zip code into our FREE tool above!

Some Other Facts to Keep in Mind

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Here are some valuable statistics to keep in mind when searching for gap coverage. Some of these factors involve assessing the value of your car and what gap coverage is meant to cover.

  • The average car depreciates by 11 percent as soon as it leaves the lot.
  • A car depreciates by 20 percent for each year it is used.
  • If you have an accident after your new car is purchased, you could find yourself still owing repair costs because your policy may not cover everything.
  • Gap insurance is meant to cover what your normal standard insurance does not.
  • You must understand what your gap insurance covers before agreeing to it.

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What Gap Insurance Does Not Cover

While shopping for gap insurance for your car, you will want to keep in mind that gap insurance will not cover everything.

Below are some of the examples of situations that gap insurance will generally not cover:

  • Gap insurance will not pay for car payments you owe due to a financial situation, loss of job, or disability.
  • If you lose your car due to failure to pay your bill, gap insurance will not cover it.
  • Gap insurance does not cover rental car use while your car is being repaired. However, if your standard auto insurance has rental car coverage, you may use this to cover a rental.
  • Insurance never covers any type of loan payments — no matter the circumstances.

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What does gap insurance cover?

In short, gap insurance pays the difference between what you owe and what your car is worth, according to the insurance company. Notice that this puts the control with the car insurance company.

It is so important to make sure the insurance company you have will do what they say they are going to do and to check them out thoroughly before purchasing.

One of the most important things you should do when shopping for car insurance is to read the fine print. You should know exactly what your insurance will cover and what it will not cover.

You should also feel ask your agent anytime if there are additional coverage options. In some cases, you may even want to change your insurance completely and start all over.

Remember that when you are changing insurance providers, make sure you do not relinquish your current policy until you have been notified that your new policy is in place. Doing so will ensure that you have no lapse in coverage.

Cover Loss Due to Theft

Some car insurance situations and mishaps present a problem with whether or not the company will cover the loss. Some of these situations are in control of the policyholder and some are not

In order to understand and know that your particular insurance coverage will cover what you need it to, you should do a lot of comparison shopping and compare gap coverages side-by-side to be sure you know what you are getting.

Sometimes you may find yourself in a situation where your car has been stolen due to no fault of your own. Does gap insurance cover this?

You might think that gap insurance would cover every situation of loss. The truth is that there is no easy answer to this question.

The short answer is yes. Gap insurance often will cover a stolen car. But, if you have been negligent in your care of the car and your negligence causes the car to be open to theft, you may not be able to use your gap coverage to cover the costs.

There are some important tips you should keep in mind when deciding whether your insurance will apply in the case of theft. Read these tips and think about them as you shop for gap insurance.

  • Make sure that your car is in a secure place so that the insurance provider could not claim that you were negligent
  • Protect your car from theft by locking your vehicle when you are parked in a public place
  • Document any incidents of attempted theft and what you did to keep this from happening again
  • Never leave your keys in the ignition and run inside a building. If a theft occurs in this circumstance, your gap insurance will not cover you
  • Understand your gap coverage and shop around to compare for better plans if needed

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Questions to Ask About Gap Insurance

When comparing auto insurance policies, there are some questions you will want to ask to ensure that you get the coverage you need.

  • What is considered negligence by your company in the event of theft?
  • What steps should I take to ensure that my gap insurance will pay in the event of car theft that is out of my control?
  • What other coverage will this policy cover?
  • What is the claims process for gap coverage?

When Shopping for Gap Insurance

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When shopping for gap insurance there are some important things to look for to make sure you get the best policy that will cover your car in the event of theft or any other similar situation.

  • Gap insurance should cover any gap in coverage that your normal insurance does not cover.
  • Gap insurance should cover theft except in cases of when the driver was negligent or careless with their property.
  • Good gap coverage will include coverage involving loss due to any justifiable cause, such as accident, fire, flood, or theft.
  • Gap coverage should not demand more than the owner of the policy can reasonably show as evidence of a loss.

The following list by the Insurance Commissioner of the State of Washington shows what gap insurance covers and does not cover in that state. To see what applies in your state regarding gap insurance (or other types of insurance), go here.

As you shop for your gap insurance coverage, consider how much premium you are willing to pay for insurance that you may never use. Gap coverage is only used in the event that your standard auto insurance is not enough to cover your loss.

This insurance acts like a second policy and comes in to fill in the gaps in the event your standard insurance is not enough.

When considering the type of gap coverage you want and how much you want to carry, consider the amount of risk as well that you might have an accident or theft of property that would require that you use your gap insurance.

Ask questions if you do not understand what the policy covers, if you want more time to shop around for other policies, or if you need someone to explain the fine print.

Having a deep understanding of the details of a policy is important since it could mean so much money down the road.

Make sure you have the right coverage at the right price! Enter your zip code into our FREE comparison tool.