Does GAP insurance cover stolen cars?
GAP insurance for stolen cars cover the difference between your car's market value and your outstanding loan.To get GAP insurance for a stolen vehicle, file a claim, and get an actual value appraisal.
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Tracey L. Wells
Licensed Insurance Agent & Agency Owner
Tracey L. Wells is a licensed insurance agent and Farmers insurance agency owner with 23 years of experience. He is proud to be a local Farmers agent serving Grayson, Georgia and surrounding areas. With experience as both an underwriter and agent, he provides his customers with insight that others agents may not have. His agency offers all lines of insurance including home, life, auto, RV, busi...
Licensed Insurance Agent & Agency Owner
UPDATED: Feb 13, 2024
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Editorial Guidelines: We are a free online resource for anyone interested in learning more about auto insurance. Our goal is to be an objective, third-party resource for everything auto insurance related. We update our site regularly, and all content is reviewed by auto insurance experts.
UPDATED: Feb 13, 2024
It’s all about you. We want to help you make the right coverage choices.
Advertiser Disclosure: We strive to help you make confident car insurance decisions. Comparison shopping should be easy. We are not affiliated with any one car insurance company and cannot guarantee quotes from any single company.
Our partnerships don’t influence our content. Our opinions are our own. To compare quotes from top car companies please enter your ZIP code above to use the free quote tool. The more quotes you compare, the more chances to save.
On This Page
- GAP insurance stands for guaranteed auto protection
- If you have gap insurance, the difference between what you still owe on your car or truck and how much the car is worth will be covered
- If your car is stolen, gap coverage can make up for the difference in the fair market value of your car and what you have left to pay on a loan
What is gap insurance?
Gap coverage or insurance is also called guaranteed auto protection. The basis for gap insurance is that as soon as you take the car off of the dealership lot, it begins to depreciate in value.If you are in the beginning stages of paying off a car loan, there is a possibility that your loan obligation will be greater than what the car is currently worth.In the event that you have a total loss on your car, then cap coverage would help make up this difference for you.
Many car dealerships or lending institutions will require that you maintain coverage above what is required under the state minimum amounts.
This is typically referred to as collision and comprehensive insurance. The important thing to remember about these supplemental insurance policies is that they only cover the fair market value of your car.
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When Gap Insurance is a Good Idea
Not every vehicle is a good candidate for gap coverage. It is typically used for vehicles that are financed or leased.Because adding gap insurance with collision coverage and comprehensive insurance only means a small increase in your annual insurance premium, it can be an attractive choice for some drivers.The most common circumstances for getting gap coverage on your car or truck include:
- If you put little to no money down on the purchase of your vehicle and have a high loan payment you may end up owing more than the value of your vehicle in an accident
- If you financed your car for 60 months or longer, you may still have payments to make in the event of an accident
- When you lease your vehicle, you may be required to get gap insurance by the car dealership
- If you purchased a unique vehicle that depreciates faster than average, then gap insurance could be a good idea for you
- If your lender allowed you to roll over a negative equity loan balance from a separate vehicle into a new auto loan, then you should almost certainly take out gap insurance
- If you are considering whether gap insurance is right for you, it is a good idea to speak to your existing insurance agent to find out what is covered under your policy.
You may also be able to get a discount on gap coverage if you are already insured for other policies from that same company.
In addition, it is always a good idea to mention the type of car you are considering buying or leasing when calling around for car insurance quotes to find out if gap coverage is advisable in your situation.
Read more: Do you need GAP insurance on a used car?
Paying for Gap Insurance
When you purchase gap insurance, you are really only trying to cover the gap between the fair market value of your car and the remaining amount left to pay on your car loan.The way that gap insurance is usually billed is by including it in your regular premium.There will come a point when you have closed the gap, meaning you owe very little left on your car loan or the fair market value of your car has not depreciated past what you owe on your loan.
You should request to cancel your gap coverage at this point so that you are not paying for something that you do not need.
In general, gap insurance can cost more when purchased from the car dealership than through a traditional insurance company.Before purchasing gap insurance from the dealership, be sure to call around for quotes on gap insurance coverage to make sure you are getting the lowest rate possible.
Gap Insurance for a Stolen Car or Truck
The FBI reports that a car is stolen every 44 seconds in the U.S. If your car or truck is stolen, the first thing you need to do is call the police and file a claim with your insurance company.Does GAP cover stolen cars? The insurance company will determine what the actual value of your car is and will compare that to what you still owe on your vehicle loan.If you end up still owing more than what the car would be worth, then you are covered for that difference through gap insurance.It is important to act quickly in filing a claim because there may be certain deadlines for notification and reporting under your state’s laws and your insurance policy.Your insurance agent will be able to assist you with the claim process for a stolen vehicle. Be sure to specify and ask if GAP insurance cover stolen cars.
Read more:
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Does liability insurance cover a stolen car?
Liability insurance will only cover you if you cause bodily injury or property damage to someone else, but it won’t cover a stolen vehicle.
If I bought my car outright, do I need gap insurance?
There’s no reason to buy this coverage if you bought a car with cash and own it without a loan. It is for when you owe more than the value of your vehicle. If you have the car paid off, and it’s no longer financed, you don’t owe any more than the car is worth, and so there would be no payout from gap coverage.
Is gap insurance worth it?
The answer to this question depends on your situation. Gap insurance may be worth it if you owe a lot more than what the car’s worth.So, for instance, if you bought an $80,000 car and only put down $5,000, you may want to get gap insurance, so you’re not stuck having to make up the difference if an insurer totals your car.If the outstanding loan or lease balance is only slightly more than the vehicle‘s, you may want to chance it. In that case, it’s a good idea to put some money aside in case you need it if an insurer totals your car.You may have to continue paying your lease payments until your insurance claim is completely settled. (For more information, read our “How do I find out if GAP insurance is included in my car lease?“).
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Case Studies: Illustrating the Benefits of GAP Insurance in Real-Life Scenarios
Case Study 1: John’s Stolen Car
John’s car was stolen from his driveway. He immediately filed a police report and contacted his insurance company. The insurance company determined the actual value of the car and compared it to the remaining balance on John’s car loan. Fortunately, John had GAP insurance, which covered the difference between the actual value and the loan amount. This helped John avoid financial loss due to the theft.
Case Study 2: Sarah’s Upside-Down Loan
Sarah purchased a new car with a small down payment and a long-term loan. A few months later, she was involved in an accident, and her car was declared a total loss. Since the car’s value had significantly depreciated, the insurance payout was lower than her remaining loan balance. Luckily, Sarah had GAP insurance, which covered the shortfall and prevented her from being responsible for the remaining debt.
Read more: How do you get the lowest down payment on car insurance?
Case Study 3: Mark’s Leased Vehicle
Mark leased a brand-new vehicle. During the lease term, the car was stolen. Mark reported the theft to the police and his insurance company. The insurance company determined the actual value of the stolen car and compared it to the remaining lease payments. With GAP insurance, Mark was protected from the financial burden of paying for a vehicle he no longer had.
The Bottom Line on Gap Insurance
Gap insurance is typically used when you are upside down on a car loan, which means that you still owe more than what the car is actually worth.If you have gap coverage, it will pay for the difference between the actual value of the car and what you have left to pay on your car loan.As long as your gap insurance policy covers loss in the case of theft, your stolen vehicle will be eligible for coverage under your gap insurance.Comprehensive auto insurance will cover the loss of your vehicle due to theft otherwise, but this is a supplemental policy that is not typically required under state laws. Contact your auto insurance company for further details.Enter your zip code below to compare car insurance rates from multiple companies at once!
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Frequently Asked Questions
What is GAP insurance?
GAP insurance, or Guaranteed Asset Protection insurance, is an optional coverage that is designed to protect you financially if your car is stolen or declared a total loss due to an accident. It covers the “gap” between the amount you owe on your car loan or lease and the actual cash value (ACV) of your vehicle.
Does GAP insurance cover stolen cars?
Yes, in most cases, GAP insurance does cover stolen cars. If your vehicle is stolen and not recovered, your comprehensive insurance coverage will typically reimburse you for the ACV of the vehicle at the time of the theft. However, this amount might be lower than the remaining balance on your car loan or lease. This is where GAP insurance comes into play, covering the difference between the ACV and the amount you owe.
What does GAP insurance specifically cover in case of car theft?
In the event of car theft, GAP insurance covers the difference between the ACV of your stolen vehicle and the outstanding balance on your car loan or lease. It ensures that you are not left responsible for paying off the remaining debt on a vehicle that is no longer in your possession.
Are there any requirements to claim GAP insurance for a stolen car?
To claim GAP insurance for a stolen car, you typically need to meet certain requirements, which may vary depending on the insurance provider. Common requirements include filing a police report and cooperating fully with the investigation. It’s important to review the terms and conditions of your GAP insurance policy to understand the specific requirements and procedures for filing a claim.
Are there any limitations to GAP insurance coverage for stolen cars?
While GAP insurance generally covers stolen cars, it is essential to be aware of potential limitations. Some policies may have a maximum coverage limit, so it’s important to verify the terms of your GAP insurance policy. Additionally, GAP insurance typically does not cover other costs related to the theft, such as rental car expenses or personal belongings inside the stolen vehicle. Always consult your policy or contact your insurance provider to understand the full extent of coverage and any limitations that may apply.
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Tracey L. Wells
Licensed Insurance Agent & Agency Owner
Tracey L. Wells is a licensed insurance agent and Farmers insurance agency owner with 23 years of experience. He is proud to be a local Farmers agent serving Grayson, Georgia and surrounding areas. With experience as both an underwriter and agent, he provides his customers with insight that others agents may not have. His agency offers all lines of insurance including home, life, auto, RV, busi...
Licensed Insurance Agent & Agency Owner
Editorial Guidelines: We are a free online resource for anyone interested in learning more about auto insurance. Our goal is to be an objective, third-party resource for everything auto insurance related. We update our site regularly, and all content is reviewed by auto insurance experts.