No, gap insurance is not required in Utah or any other state. Even though gap insurance is never required by state law, auto lenders and lessors often make borrowers get this type of coverage to protect their investment in financed vehicles.
Gap insurance is an optional type of coverage that pays the “gap” between your car’s actual cash value (ACV) and the balance remaining on your car loan or lease if the vehicle is stolen or totaled. It is particularly useful for drivers with financed vehicles who made a small down payment or have a car that depreciates quickly.
Gap insurance in Utah costs an average of $2 to $30 per month, depending on whether you buy it from a dealership, a car manufacturer or your insurance provider. Gap insurance is only needed for one to three years, or until your vehicle is worth more than you still owe on your loan or lease.… read full answer
Gap insurance covers the gap between a totaled vehicle’s actual cash value and the amount still owed on a loan or lease. However, it is important to note that the cost of gap insurance doesn’t vary much by state. Rather, the cost of gap insurance differs based on the provider it is purchased from and the vehicle being covered.
Cost of Gap Insurance by Provider
$200 to $700 total
Dealership or Lender
$200 to $700 total
Add-on to Existing Car Insurance Policy
$20 to $40 per year
Although buying gap insurance directly from your insurance company is usually the cheapest option, not every insurer offers gap insurance in Utah.
Insurance Companies That Offer Gap Insurance in Utah
Gap insurance can be a useful thing to have for Utah drivers who made a small loan down payment, have a lease, or drive a car that depreciates in value quickly, like luxury and sport vehicles. While gap insurance is never required by Utah insurance laws, lenders and lessors often require it for financed vehicles.
If you lease or finance your car, you may be required to carry coverage types that are not mandatory under Utah law. Lenders usually require comprehensive and collision insurance. Collision insurance covers repairs to your car when you hit another car or object. If the damage to your vehicle was caused by something other than a collision—like a natural disaster, vandalism, falling objects, or animals—it is most likely covered by comprehensive insurance. Lenders may also require gap insurance, which covers the difference between what you owe on your loan or lease and what the vehicle was worth if it gets stolen or totaled.
A car is considered a total loss in Utah when the vehicle’s actual cash value is equal to or less than the cost of repairs plus the salvage value. Actual cash value refers to how much the car was worth immediately before the damage, while the salvage value is the car’s worth in its damaged state.… read full answer
When a car is totaled according to the Utah totaled car law, the policyholder will receive the car’s actual cash value from the insurance company if the loss was covered. Insurance companies in Utah are also required to pay for applicable taxes and title costs if the policyholder purchases a replacement vehicle.
Utah Total Loss Law Example
Pre-crash value: $15,000
Cost of repairs: $6,000
Salvage value: $10,000
Pre-crash value - cost of repairs - salvage value = -$1,000
Result: Car is totaled
In this example, the driver’s car is totaled according to Utah law because its pre-crash value, or actual cash value (ACV), is lower than the sum of its repair cost and salvage value.
It’s also worth noting that the vehicle used in this example probably cost more than $15,000 when it was originally purchased. The ACV is meant to reflect the car’s worth in its depreciated state, not the cost of replacing the vehicle. If you want a higher payout in the event of a total loss, you should look into optional coverage add-ons like new car replacement or gap insurance.
For more information on what it means for you if your car is totaled, check out WalletHub’s totaled car guide.
WalletHub Answers is a free service that helps consumers access financial information. Information on WalletHub Answers is provided “as is” and should not be considered financial, legal or investment advice. WalletHub is not a financial advisor, law firm, “lawyer referral service,” or a substitute for a financial advisor, attorney, or law firm. You may want to hire a professional before making any decision. WalletHub does not endorse any particular contributors and cannot guarantee the quality or reliability of any information posted. The helpfulness of a financial advisor's answer is not indicative of future advisor performance.
WalletHub members have a wealth of knowledge to share, and we encourage everyone to do so while respecting our content guidelines. This question was posted by WalletHub. Please keep in mind that editorial and user-generated content on this page is not reviewed or otherwise endorsed by any financial institution. In addition, it is not a financial institution’s responsibility to ensure all posts and questions are answered.
Ad Disclosure: Certain offers that appear on this site originate from paying advertisers, and this will be noted on an offer’s details page using the designation "Sponsored", where applicable. Advertising may impact how and where products appear on this site (including, for example, the order in which they appear). At WalletHub we try to present a wide array of offers, but our offers do not represent all financial services companies or products.