Gap insurance in Arizona

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Gap insurance may be something you’ve heard of from someone like a friend, a car dealer, or an insurer. It’s well-known that a car loses its value the moment it leaves a dealership. This continues to happen over time. When you ask for a quote, the best auto insurance companies will explain whether gap insurance is available to protect you financially in case of total loss. You may be able to decide whether gap insurance is right for you by understanding how it works, its purpose and how it can help provide financial protection.

What is gap insurance?

Gap insurance coverage will fill the gap between your total loss insurance payout and your outstanding loan balance. Your collision or comprehensive coverage pays for the actual cash value if your vehicle is lost due to a variety of reasons, including fire, accident, or theft. However, this may not be enough to cover the remaining balance on your car loan.

If you are “upside-down” with your Arizona loan, gap insurance will help close the gap. This can happen to any car loan. However, it is more common with certain makes and models of cars that are depreciating quickly.

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What is the Arizona equivalent of gap insurance?

Gap insurance is designed to cover very specific situations where you owe more on your car than you get in car insurance payouts. Gap coverage in Arizona is usually only available if you purchase a new car that is less than one year old.

Gap is not an additional coverage that covers many losses such as the cost of renting a vehicle while repairs or waiting for a replacement. Gap does not cover third-party liability claims, medical expenses, or repair costs.

What are the best times to use gap insurance?

Only situations in which a vehicle has been completely destroyed are eligible for gap insurance. Most common is a single or multiple car accident that damages your vehicle. Other covered perils can also cause loss, including theft without recovery. The actual cash value of your vehicle at the time of loss and outstanding loans will determine the gap coverage amount.

Let’s say you bought your car new for $25,000, and it has now depreciated to $17,000. The purchase was financed by you and you owe $20,000. You financed the purchase and owe $20,000.

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Gap insurance vs. other coverages

A policy with three primary coverages will provide the best coverage for a vehicle. Each coverage covers you and others against a particular type of injury or damage, in the case of an accident or other covered loss. These coverages are separate and Gap insurance is typically not included in standard auto insurance policies.

Arizona: Where can I buy gap insurance?

Arizona’s top car insurance companies often offer gap insurance at reasonable prices. Credit unions and dealers often offer gap coverage along with car loans. However, the cost may be higher than what is charged by insurers. You will pay more interest if the premium is included in the loan. Drivers who bundle gap insurance with their loan may find this more convenient.

Arizona Gap Insurance Companies

These are some of the biggest car insurance companies in Arizona and other providers who can offer you Arizona gap coverage.

  • Allstate – Allstate provides gap coverage to protect new vehicles and certain used vehicles. Allstate’s Arizona gap insurance can cover loan amounts up to $50,000
  • State Farm – State Farm’s solution to gap coverage is ” Payoff Protector“. This coverage protects against the exact same risk as gap coverage in that the total loss payout will not exceed the loan balance. Only vehicles that are otherwise insured and financed by State Farm Bank can be eligible for Payoff Protector.
  • The Hartford – Hartford offers gap coverage to supplement its standard car insurance policies. The Hartford states that this coverage covers the difference between the car’s Actual Cash Valu (ACV), and the amount you owe for the loan, in the event of theft or total loss.
  • Nationwide Nationwide provides gap insurance. However, the policyholder is still responsible for any loss of policy deductible. This information is crucial to consider when you decide the deductible amount that you want to include in your car insurance policy.
  • Arizona Federal Credit Union — The credit union’s “Guaranteed asset Protection” plan pays the difference in what your car insurance company will pay and what is owed on your car loan. It also pays your deductible, and provides credit towards a new vehicle.
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Questions frequently asked

What is the cost of gap insurance?

Arizona car insurance dealers, financing companies and car insurance companies all sell gap insurance. To understand your options and to determine if rates might be more affordable for you, contact your car insurance company.

Arizona requires gap insurance

You are not required to have Arizona gap insurance. Only certain minimum limits must be in place to protect other drivers from being injured or causing property damage. It can provide financial protection in addition to financial protection due to the financial risk.

Can I cancel my insurance coverage for gap?

Yes, you can cancel your gap coverage at any time. This is a question that you should ask yourself when considering this. You can usually get a prorated refund for amounts paid, but make sure you are certain before you cancel.