Yes, Progressive offers a type of gap insurance called loan/lease payoff coverage. Loan/lease payoff insurance helps cover the difference between a totaled car’s actual cash value and the policyholder’s loan or lease balance, but will only pay up to a maximum of 25% of your vehicle’s value toward this difference.
Key Things to Know About Progressive Loan/Lease Coverage
Progressive loan/lease payoff coverage costs $5 per month.
Progressive loan/lease coverage does not pay for your deductible, extended warranties, or any balance that you rolled over from previous loans.
Loan/lease coverage is usually a better investment than purchasing gap insurance from a dealership, where the cost is often rolled into your loan and charged interest.
Fault is not a factor in loan/lease coverage payouts.
You can also get gap insurance on the loan through the banking institution. All you have to do is ask what the price difference per month would be. I've done it that way on four different vehicles, and it paid off on the one vehicle I needed it to!
Gap insurance is worth the money whenever you owe more on your car loan or lease than the car is worth. For example, if you paid a small down payment on your car, your loan term is 4-5 years or your car will depreciate quickly, you should consider getting gap insurance. ... read full answer
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.
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.
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.
Why Getting 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.
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 that is no longer drivable. This type of insurance is optional, unless required by your lender or lessor.... read full answer
In order to purchase gap coverage, a driver typically needs comprehensive and collision insurance, as well. Collision and comprehensive coverage will pay up to the car’s actual cash value (ACV) if it’s a total loss, and then gap insurance pays off whatever you still owe.
Example of How Gap Insurance Works
Imagine you buy a $50,000 car with a down payment of $10,000. One year later, the car is worth $20,000, but you still owe $24,000 on the loan. If the car is totaled in an accident or stolen, your insurance company will pay $20,000 (the car’s actual cash value), minus your deductible.
If you don’t have gap insurance, you’ll still owe $4,000, and you’ll still have to pay off the car even though you can’t drive it. But if you do have gap insurance, it will pay the $4,000, as you can see below.
New car price
$50,000
Down payment amount
$10,000
Loan balance after one year (4% APR/5-year loan)
$24,000
Actual cash value after one year
$20,000
Insurance payment without gap coverage
$20,000
Deficit
$4,000
Gap insurance payment
$4,000
Other Key Things to Know About Gap Insurance
Gap insurance can be purchased from dealerships, banks, credit unions and car insurance companies.
The money received from your gap insurance policy will be paid directly to your lender or lessor, not to you or toward a new vehicle.
Some gap insurance policies will cover your comprehensive or collision deductible.
Gap insurance is not legally mandated in any state, but it can be required by lenders and lessors.
If you sell your car, pay off your loan early, or trade your car in, you can receive a gap insurance refund.
To learn more, check out WalletHub’s guide on gap insurance.
No, Geico does not offer gap insurance, but you can find affordable gap policies from many other major insurance companies. Gap insurance is a specialty type of coverage that pays the difference between your car’s actual cash value and your loan or lease balance if the vehicle is stolen or totaled. You may be required to carry gap coverage if your vehicle is financed.... read full answer
If you’re a current Geico customer and want to maintain your policy, you could purchase gap insurance from a dealership or a stand-alone company. However, dealership gap insurance is often the most expensive option, since it’s usually rolled into your loan and charged interest.
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