You may be asked to purchase gap insurance with most car leases or purchases. It is possible to purchase gap insurance at an additional cost, but it may be worth it depending on your financial situation or desire for peace of mind. To determine if this optional coverage is worth it, weigh the pros and cons to buying gap insurance in New Jersey from either a car dealer or insurance agency.
What is gap insurance?
Gap insurance can be purchased from a dealer or an insurance provider when financing or leasing a car. Gap insurance covers the difference between what the car’s actual cash value and the amount you owe.
What is gap insurance?
Gap insurance waivers provided by lenders and dealers in New Jersey must be included in the purchase contract. If buyers decide to cancel their gap insurance coverage, they are entitled to a minimum 30 day free-look. Any refunds due to the borrower must be made within 90 days of the termination of the finance agreement.
Gap insurance is not as simple as it seems. Gap insurance is generally limited to newer models of cars or older than one year. Gap insurance is not available for older cars. An insurance company might have different requirements.
Gap insurance does not cover new car replacement. New car replacement is offered by some car insurance companies. This pays enough cash to replace your car with a newer model of the same make and condition. The eligibility requirements vary by insurance company but are usually limited to cars that are two years old or older.
What are the best times to use gap insurance?
Gap insurance is only allowed when the car is involved in a covered accident and is considered a total loss. Gap insurance is not available for accidents or repairs.
If your car is damaged, but repairable, you still have to pay your car payments, even if it is not in use for long periods of time. Gap insurance can be used if your vehicle is declared total loss and cannot be fixed. The insurance company will pay off the entire loan amount if the car’s actual cash value is $10,000 and your owing $8,000 Gap insurance will pay $2,000 to the lender if you owe $12,000 and you are unable to repay the loan amount.
Gap insurance vs. other coverages
Gap insurance does not offer the same coverages as other car insurance companies. Gap insurance does not cover the cost of totaling your car.
New Jersey: Where can I buy gap insurance?
Gap insurance can be purchased in New Jersey from many places. Gap insurance can be added to any insurance policy by some car insurance companies. While some insurance companies offer standalone coverage, this is rare.
If you’re buying a vehicle in New Jersey, lenders or finance companies may offer gap insurance. Gap insurance may be offered by dealerships in New Jersey if you lease or purchase a car. While some lenders may require one payment to cover the gap insurance, others might include it in your monthly payments. New Jersey law stipulates that gap insurance must be provided as either an insurance policy or contractual obligation between the buyer, the lender, and the finance company.
New Jersey Gap Insurance Companies
- Nationwide – In New Jersey you can add gap insurance to your Nationwide car insurance. As long as you have collision coverage.
- Plymouth Rock Assurance New Jersey drivers have two options for purchasing gap insurance: as an option to purchase a policy with Plymouth Rock, or as part the optional Assurance Premier upgrade package. Comprehensive and collision coverage are required.
- NJM Insurance – NJM offers optional coverage, including gap insurance, to auto policyholders. To be eligible, coverage must be purchased within 30 days. There are also other requirements.
- Credit Union of New Jersey offers gap insurance as an extra cost to borrowers who use the credit union for financing their car purchase. You have 60 days to return it or get your money back.
- Planet Honda New Jersey: For those who are eligible, Planet Honda New Jersey offers gap insurance. You can find details about the Gap Insurance Contracts’ terms, conditions, and exclusions.
- American Guardian Warranty Services – Compass Gap is offered by AGWS. This will cover the difference in case your car is totaled and waive your deductible up to $1,000
Questions frequently asked
What is the cost of gap insurance?
Gap insurance costs vary and can be more expensive if it is purchased from a lender or dealer than if it is part of your car insurance policy. Ask your car insurance company for a quote and learn about financing costs if you’re considering purchasing gap insurance in New Jersey.
Is New Jersey required to have gap insurance?
In New Jersey, gap insurance is not required. Some insurance companies, lenders and dealerships offer it as an optional coverage.
What is standalone gap insurance?
A policy that only covers gap insurance, called standalone gap insurance. It is possible to buy gap insurance directly from a lender or dealer. Gap insurance purchased from an insurance company is often an optional addition to your car insurance policy.
