No, gap insurance will not cover a totaled car without insurance unless the gap policy specifically allows it, which is highly unlikely. In most cases, you cannot purchase gap insurance or file a gap insurance claim if you don’t have collision or comprehensive coverage.
If you purchased gap insurance from a dealer but have allowed your car insurance to lapse, you are likely violating your contract. Gap insurance is really insurance for your loan or lease, not your car, and any reputable lender or lessor will require you to maintain full coverage on a leased or financed vehicle.
For more information, check out WalletHub’s guide to gap insurance.
Yes. You need gap insurance if you have full coverage and still owe money on a car loan or lease. Gap insurance is needed on top of full coverage because the types of insurance that go into full coverage do not cover the difference between what you owe on a loan/lease and the car’s actual cash value, like gap insurance does.… read full answer
Gap insurance – short for guaranteed asset protection insurance, and sometimes called loan/lease payoff coverage – protects you financially from having to cover the cost of depreciation, or the difference between what you still owe on your contract and what your insurance company says the vehicle is actually worth today. Collision and comprehensive protection – the main components of full coverage, along with liability insurance – won’t cover that. As a result, you need gap insurance even if you have full coverage, especially if your situation leads to a relatively large gap to cover
When You Need Gap Insurance If You Have Full Coverage
You’re financing/leasing a new vehicle for a long term (60+months).
You made a small down payment on a new vehicle (less than 20%).
You rolled over negative equity from a previous auto loan.
You financed a vehicle that has a high depreciation rate.
Your contract has a high interest rate.
Your lender or lessor requires gap insurance.
It’s important to remember that while gap insurance isn’t required by any insurer or state, having gap insurance on top of full collision and comprehensive coverage will probably be required by your lender if you’re financing/leasing a new vehicle, and even some used vehicles. In addition, gap insurance is meant specifically for drivers who still owe a balance on their vehicle, so if you own your car outright and have full coverage, you don’t have a need for gap insurance.
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