Does Allstate sell gap insurance?

Gap insurance is worth it if you paid a small down payment on your car, your loan term is 4-5 years, or your car will depreciate quickly. Gap insurance is never mandated by state law, and few lenders or lessors require it, so the decision to buy it depends on personal circumstances.… read full answer

Gap Insurance Is Worth It When:

• You don’t have the savings to pay off your loan or lease if the car is totaled or stolen.
• Your down payment is less than 20% of the car’s value.
• Your loan will last four years or more.
• You drive more miles than average, which reduces the car’s value faster.
• Your car is a make and model that depreciates especially fast, like a luxury sedan or electric vehicle.
• You are a single-car household and need a car to get around.
• Your loan includes negative equity from your last car and your gap insurance provider doesn’t exclude previous cars’ loan balances from coverage.

Since gap insurance covers the difference between the car’s actual cash value and the amount you owe, researching these two numbers will be a key deciding factor in whether gap insurance is worth it.

For example, say you buy a car for $20,000 and your down payment is $2,000. This small down payment suggests that gap insurance might be worth it, but it’s still a good idea to check the car’s anticipated value after a year to determine if there will be a gap. If the car is worth $12,000 after a year but you’ll still owe $15,000, gap insurance could be a smart investment. If you don’t buy gap insurance and this car is totaled after a year, you’ll still owe $3,000 even though you can no longer drive it.

On the other hand, if your down payment is large enough or the car’s resale value is high enough that you’ll never owe more than the car is worth, gap insurance is unnecessary. Similarly, if you do owe more than the car is worth but you have the resources to pay the difference if the worst happens, it might be worth taking the risk.

The best gap insurance is offered by Progressive, Allstate, and Liberty Mutual. It’s best for drivers to buy gap insurance directly from their standard insurance provider, or as a standalone policy from another insurance company if their insurer does not offer gap coverage.

Drivers should usually avoid buying gap insurance from a dealership or bank, so they do not end up paying interest on their premium. And like with any insurance product, it’s best to compare multiple quotes.… read full answer

Best Gap Insurance Companies

• Progressive
• Allstate
• Liberty Mutual
• Nationwide
• Travelers
• American Family

Tips for Getting the Best Gap Insurance

Comparing options to find a low price is always important, but price should only be one factor that you consider when deciding on the best gap insurance. You should also compare coverage limits.

For instance, Progressive and American Family offer variations of gap insurance called “loan/lease payoff” and “loan or lease assistance coverage” respectively. Both insurers limit gap payouts to 25% of the car’s actual cash value (ACV). For most drivers, 25% will be plenty to cover any gap between their loan balance and the ACV. But it’s worth checking that 25% will be enough for you if you’re shopping for gap insurance. You can use online tools like Edmunds or Kelley Blue Book to estimate your car’s future value and compare it with your loan balance.

In addition, consider whether you want gap insurance to cover your deductible. Most policies will not pick up the tab for your collision or comprehensive deductible if your car is destroyed or stolen, but Allstate is a notable exception.

To prevent future inconvenience, you should also check policy details and read reviews before purchasing gap insurance to determine if a company allows customers to easily cancel their coverage. Gap insurance is useless once your loan balance is less than the car’s value, so many drivers cancel their gap payments after a few years.

Finally, remember that dealerships and banks rarely offer the best gap insurance. One exception to this is if the bank or dealer includes interest-free gap insurance as part of your policy. For instance, car loans made with State Farm Bank automatically include “Payoff Protector,” which functions the same way as gap insurance.