The dealership might talk to you about buying gap insurance before you drive off the lot. Some drivers find the ease of buying gap insurance online a benefit. However, it is possible to save more if you ask about gap insurance through a car insurance company. It is a good idea to compare quotes from top car insurance companies in order to find the best deal on gap coverage and other coverages for a financed car.
What is gap insurance?
North Carolina gap insurance covers the difference between the car’s actual value and the remaining loan balance in the event that the car is declared total loss or stolen. It is designed to protect you from having to make loan payments on a car that you don’t own or to avoid making multiple car payments if you purchase a vehicle with a large outstanding loan balance.
Car insurance is all about financial protection. However, gap insurance specifically addresses financial health. Gap insurance helps you avoid having any outstanding debt. It pays the balance of your car loan, after the actual cash value payout from an insurance company is taken into account.
Guaranteed Asset Protection is also known as Gap.
What is the North Carolina equivalent of gap insurance?
A few things to remember before you begin looking for North Carolina gap coverage: Not all cars are eligible. The majority of insurers offer gap insurance only when the following conditions are met:
- The car is less then 2 years old
- Comprehensive and collision coverage are also available
- You are the original loan/leaseholder
This is not the case for all vehicles. Even though most lenders require collision and comprehensive coverage, there are some vehicles that aren’t old enough to make gap insurance necessary. You may not be eligible for gap insurance in North Carolina if you’re not the original loan- or leaseholder.
Gap insurance should not be confused for ‘new vehicle replacement’ coverage. There is a clear distinction between them. Gap coverage covers the difference between the car’s current value and what you owe to a lender. After the vehicle’s total, a new car replacement pays financial compensation. Although the replacement cost may be higher than the actual cash value, it will not take into account any outstanding loan balances that exceed the replacement cost of the vehicle.
What are the best times to use gap insurance?
Gap insurance is only allowed in North Carolina if the vehicle is declared undriveable or totaled.
Let’s say you just bought a car and still have $25,000 to pay the lender. If a tropical storm hits your area, it could knock a tree onto your vehicle. The cost of repairs will exceed the vehicle’s value. You have comprehensive insurance so you are covered for any damage. You will only get a $20,000 payout after you have taken into account the deductible. This is because the car’s value has decreased. You also purchased gap coverage to pay the $5,000 remaining on your loan.
Gap insurance is not available if the vehicle is still in use or the cost to repair it does not exceed its actual cash value.
Gap insurance vs. other coverages
In that it protects you financially after an accident, gap insurance is similar to other forms of car insurance. It protects your lender just as much as you. This is the big difference between gap insurance and other types. Some lenders may also require gap insurance, just as they need comprehensive and collision coverages.
Gap insurance is not necessary for most financing situations, but collision and comprehensive are. Let’s see how they compare:
North Carolina: Where can I buy gap insurance?
There are many gap insurance providers. Do not be surprised if yours does not. This coverage is not required for all vehicles, but it is an option that is available to those with newer and more expensive vehicles. You might also call it “loan/lease coverage” with your insurance company. If you’re looking for gap insurance, your provider may offer it under an alternative name.
Gap insurance can be obtained through dealers in North Carolina. They may also want to add the cost directly to your loan. This means that you will have to pay interest on both the gap insurance and the loan balance. Gap insurance can be more expensive than buying it separately through a car insurance company. It is always a good idea to shop around for coverage.
North Carolina Gap Insurance Companies
- Allstate – Allstate offers a variety of coverage options including gap coverage and 10 discounts to lower your premium.
- Liberty Mutual – Liberty Mutual offers gap insurance, as well as a variety of coverage options and discounts. The 2020 J.D. Liberty Mutual was also ranked 822 out 1000 in the Power Auto Claims Satisfaction Study.
- Nationwide Nationwide offers gap insurance and a mobile app that makes it super simple to file a claim. Drivers who need to file a claim for gap insurance could find this useful.
- Progressive – Progressive offers several coverage options, including gaps coverage. This is called “loan/lease cover” and does not include gap coverage.
- Travelers – Travelers provides gap coverage as well as any other type of insurance, including life and home. You may be able to save additional on your premiums if you combine your car insurance coverages with other policies.
Questions frequently asked
What is the cost of gap insurance?
Gap insurance costs vary depending on the car and driver, but where you buy it is the most important factor. You will most likely pay more if you buy it through a dealer than if you go through an independent insurance company. This is because you will have to pay interest on the loan and for the coverage.
Is North Carolina required to have gap insurance?
North Carolina state law doesn’t require drivers to have gap insurance. This is something to consider when deciding where to get gap insurance. Lenders often require collision and comprehensive coverage.
How can you cancel your gap insurance?
Most drivers will be able cancel their gap coverage online via their insurance company’s website. You could call an agent to cancel your gap coverage.
