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No, gap insurance does not cover engine failure. Gap insurance only covers the difference between an auto loan or lease balance and the vehicle’s value, and it only covers that gap if the car is totaled in an event covered by comprehensive or collision insurance, or by the at-fault driver’s liability insurance.
Although gap insurance does not cover engine failure directly, it does apply if a car is totaled. Furthermore, engine damage from a crash or an event covered by comprehensive insurance could contribute to the “totaled” designation. So, gap insurance could indirectly cover engine failure, assuming that’s not the only issue.
If you’re looking for car insurance that covers engine problems unrelated to an accident or comprehensive claim, you’ll need to purchase specialized coverage like mechanical breakdown insurance or an extended warranty.
For more information, check out WalletHub’s guides to gap insurance and car repair insurance.
People also ask
Does State Farm offer gap insurance?
No, State Farm does not offer gap insurance. Instead of traditional gap insurance, State Farm has a Payoff Protector® benefit, which is similar to gap insurance and included with every vehicle financed by State Farm Bank or used as collateral on a State Farm loan.
How State Farm's Version of Gap Insurance Works
State Farm’s Payoff Protector benefit cancels the outstanding principal balance on a State Farm auto loan after the car is totaled...
read full answer by Lilah Butler, Car Insurance WriterWhen does gap insurance not pay?
Gap insurance does not pay when a car needs normal repairs, when a car is damaged but not declared a total loss, or when a driver does not make the necessary payments. Gap insurance only pays when a car is totaled and there is a difference between the lease or loan balance and the car’s value.
It’s also worth noting that certain insurers limit the amount a gap insurance policy will pay, often to 25%...
read full answer by WalletHub, Financial CompanyHow does gap insurance work?
Gap insurance works by covering the difference between the balance on a car loan or lease and what the vehicle is actually worth if it is stolen or declared a total loss. For example, if you owe $24,000 on your loan and your car is worth only $20,000 when it's totaled, gap insurance would cover the $4,000 gap. Purchasing gap coverage ensures that you don't have to make loan or lease payments for a car...
read full answer by WalletHub, Financial CompanyDid we answer your question?
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