Gap insurance can help you save more than thousands of total loss insurance claims. State farm gap insurance, known as payoff protection, can be worth investment if it meets certain criteria. However, State Farm is one of several major insurers that do not offer gap insurance.
When you purchase a new car with a large credit, this coverage can net you savings in the event of a total loss or theft. Exploring this option is worthwhile if you have sponsored a state farm loan. State Farm insures more vehicles than other insurance companies in the United States. State Farm provides a wide range of insurance products, but gap insurance is not one of those products.
What is Gap Insurance?
Gap insurance (guaranteed asset protection), or asset protection, covers the difference between a vehicle’s actual worth and the amount you owe in the event of a total loss.
Gap insurance helps you ensure you are not financially burdened if your car is stolen or totaled and you owe more on the car than its real worth.
Most vehicles lose 20% of their value within a year. A standard auto insurance coverage policy pays the vehicle’s current market value at the time of a claim. Even if an accident is badly damaged, gap insurance covers the difference between what a vehicle is currently cash worth and what you owe.
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Why do you need gap insurance?
It is a good idea to consider purchasing gap insurance for your new car if you:
- Gap insurance costs between $20 and $40 annually, saving $1000 or more depending on your car’s value when declared a total loss.
- Depreciation for a new car can leave you vulnerable in 1st year. While collision coverage will pay for losses, it will not pay more than the car value.
- Gap insurance covers the difference in the average rate, making it the most cost-effective option for new car owners.
- You can cancel gap insurance once you no longer owe more than the car is worth and get a refund when you do.
- Made less than a twenty percent down payment
- Financed for more than 60 months longer
- Leased the vehicle that carries gap insurance is required for a leased
- I purchased a car that depreciates faster than the average
- It rolled over negative equity from the old vehicle loan into the new loan.
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Does State Farm Offer GAP Insurance?
No, State Farm doesn’t offer gap insurance to auto insurance customers. State Farm is a well-reputed US insurance company offering various products, including home, auto, rental, and life insurance. GAP insurance, on the other hand, is a type of add-on insurance that covers the difference between the actual cash value of a car and the amount still owed in case of theft or total loss. While State Farm offers GAP insurance, they are not the same.
The insurance company does not offer traditional GAP stand-alone insurance coverage. Still, State Farm bank auto loan customers get automatic payoff protection benefits with the same function, almost similar to gap insurance.
You can’t add GAP to your car insurance if you are a State Farm policyholder. You may have GAP insurance through a financing agreement or lease. Some agreements build in GAP insurance; alternatively, you can buy it through your dealership, another car insurance agency, or 3rd party GAP insurance specialist.
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What exactly does State Farm offer instead of GAP Insurance?
Find out what exactly State Farm GAP insurance is if you get benefits from coverage.
State Farm offers its clients a program with a basic structure called Payoff protection. It is available for customers who do car financing with State Farm Bank. The cars used as collateral for state farm loans are covered as well. The program will offer you car theft or accident coverage, but you must be regular.
For example, if you received a $ 50,000 payout for the car but took out a loan for $ 55,000, the Payoff protection will pay $5000. However, your loan is in good standing to maintain eligibility for this program. You can contact a local branch for specific rules and restrictions for further information.
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How Does State Farm GAP Insurance Work?
With comprehensive insurance and collision coverage from State Farm, you can get a payout for the car’s actual value if it is declared total loss minus deductible, any applicable fees, or taxes when filing a claim. The same things will be applicable if theft your vehicle.
The problem?
If you recently purchased your car, you owe more on an auto loan than it was worth when it was stolen or totaled. If you have full coverage without any GAP coverage, you will be responsible for paying the remaining loan even though you no longer have the vehicle. You will be out of luck if you only carry State Farm minimum required liability insurance.
If you have a car loan through State’s Bank, your payoff protection benefits will cover the difference between the insurance payout and the outstanding on your loan.
State Farm gap insurance is available to customers with active auto insurance policies. This insurance coverage helps avoid out-of-pocket expenses in the event of a total loss. However, checking with the State Farms agent to confirm their eligibility criteria is best.
State Farm offers cost-saving benefits for the client’s base, like bundling options wherein merge auto insurance payments with other types of insurance such as home or health insurance.
Additionally, State Farm has plenty of funds that give assurance your claim will be covered. It also provides more leeway to cut your break if you need an impeccable driving record. If you have a serious accident where you were at fault, your insurance rates are still lower.
Alternatives to State for gap insurance include progressive, nationwide, and all-state
How State Farm Policyholders Get GAP Insurance Other Ways?
- Get a car loan through State Farm Bank, including a payoff protector. Payoff protector is not an insurance product, but it works similarly to gap insurance and covers the difference between the vehicle and the remaining amount on your loan or lease.
- You can buy GAP insurance from a lender or dealership. Many dealerships offer gap insurance, but you have to pay an extra amount on your loan each month to get gap insurance coverage.
- You can buy gap insurance from a third-party gap insurance provider. Some insurance specializes in selling gap insurance. Your dealership may recommend a gap insurance provider, or you can find one.
- Note: some financing and lease companies automatically include gap insurance, so check your car loan paperwork to verify you do not have gap insurance. You want to pay for gap insurance only once.
Why State Farm Do Not Sell Gap Insurance?
It does not offer gap insurance as a standalone policy. While State Farm provides a wide range of insurance policies and products, gap insurance is not one of those products. State Farm’s auto insurance policies include collision and comprehensive coverage, which may cover the difference between the actual value of your car and the amount you owe on a car loan in the event of a total loss.
However, it’s always a good idea to explore your options and compare coverage from different insurers to find the best coverage that suits your needs.
State Farm GAP Insurance: Case studies
Case study 01: Robert Lease protection
Robert leased a luxury Ford with GAP insurance with State Farm. When the car was stolen and never recovered, the State’s gap insurance covered the difference between the stolen Ford car value and the remaining balance. This relieved Robert’s financial worries and allowed him to continue without the burden of additional payments.
Case study 02: David’s vehicle replacement
David, the State’s policyholder, bought $50,000 a new car. Unfortunately, the car was totaled in a major accident nine months later. Fortunately, David had gap insurance with State Farm, which covered his remaining car loan balance and gave him extra money to purchase a new car. This prevents him from facing financial setbacks while replacing his car.
Case study 03: Charle’s negative equity protection
Charles financed a user car with credit and chose State Farm gap insurance. The economic downturn caused the cars to drop. When Charles sold the car, it was worth less than the balance. State Farm’s gap insurance covered the difference and saved Charles from negative equity.
Final Word
State Farm doesn’t offer gap insurance like GEICO and other large insurance companies. You can’t add gap insurance to State Farm policy. Instead, buy gap insurance through the third-party insurance provider, your dealership, or lender. State Farm automatically includes Payoff Protection similar to gap insurance on all vehicle loans.
Frequently Asked Questions
What is GAP insurance?
GAP insurance, known as Guaranteed Asset Protection insurance, covers the difference between the amount owed on a vehicle loan or lease and the actual cash worth of a car in the event of a total loss.
This can be helpful for individuals who have a car loan or lease and owe more on the vehicle than what it is currently worth. In the event of an accident or theft, GAP insurance can provide financial protection and prevent the individual from having to pay out of pocket for the remaining balance on the loan or lease.
How does State Farm GAP insurance work?
State Farm offers GAP insurance to its customers as an optional add-on to their car insurance policy. If a customer’s vehicle is declared a total loss due to an accident or theft, State Farm GAP insurance will cover the difference between the amount owed on the loan or lease and the actual cash value.
This can help prevent the customer from paying out of pocket for the remaining balance on the loan or lease. To be eligible for State Farm GAP insurance, customers must have comprehensive and collision coverage on their auto insurance policy. The cost of the GAP insurance will differ depending on the customer’s specific situation and the amount of coverage they choose.
Does State Farm offer GAP insurance?
State Farm offers GAP insurance as an optional add-on to their auto insurance policies. This type of insurance covers the difference between the amount owed on a car lease or loan and the vehicle’s actual cash value in the event of a total loss due to an accident or theft.
This can help prevent the customer from paying out of pocket for the remaining balance on the loan or lease. State Farm GAP insurance is available to customers with comprehensive and collision coverage on their auto insurance policy. The cost of the GAP insurance will depend on the specifics of the customer’s situation and the amount of coverage they choose.
Why would I need GAP insurance?
You may need GAP insurance if you have a car loan or lease and owe more on the car than it is currently worth. Suppose your car is declared a total loss due to an accident or theft. In that case, your auto insurance policy will typically only cover the actual cash value of the vehicle, which may be less than what you still owe on the loan or lease.
This means you may be responsible for paying the difference out of pocket. GAP insurance can help prevent this by covering the difference between what you owe and what the vehicle is worth, protecting you financially. Additionally, GAP insurance can be especially helpful if you have a new vehicle depreciating quickly.
Can I only get GAP insurance from State Farm if I have my auto insurance?
Yes, State Farm only offers GAP insurance to customers with an auto insurance policy. The GAP insurance is an optional add-on to the policy and cannot be purchased separately. You must first obtain an auto insurance policy to purchase GAP insurance from State Farm.
However, it’s always a good idea to shop around and compare prices from different insurance companies to ensure you get the best deal and coverage for your specific needs.
