what does gap insurance cover

What Does Gap Insurance Cover? Here is a detailed post about how to get gap insurance. So, if you have been searching for gap insurance claim or other keywords online, then this article is dedicated to you. It contains gap insurance through dealership. Read on to enjoy all these and more.

The minute you drive off the lot, a new vehicle loses some value — around 20% to 30% total in the first year. After that, the car’s value will continue to decline. If your car is totaled or stolen, standard auto insurance will only pay for the value of the car at the time of the incident. That means you’re responsible for paying the difference between the car’s current value and the amount of your car loan.

This is where gap insurance can come in handy.

how to get gap insurance

What Does Gap Insurance Cover

Gap insurance pays for the difference between the value of a car at the time it’s totaled or stolen and the balance of its loan or lease. Though it may seem to refer to that difference, “gap” actually stands for “guaranteed asset protection.”

Typically, you’ll need to buy collision and comprehensive coverage in order to purchase gap insurance.

What does gap insurance cover?

Gap insurance supplements the payout you get from comprehensive or collision coverage if your car is totaled or stolen. Some gap insurance plans also cover your insurance deductible. That’s the amount subtracted from the payment for a comprehensive or collision claim.

Comprehensive and collision insurance only pay what a car is worth — its cash value — at the time of a theft or accident. When you owe more on your car loan or lease than that, gap insurance comes to the rescue.

For example, let’s say you lease or buy a new vehicle with a car loan and your car is totaled in the first year. Your collision insurance pays $15,000, the value of the car at the time, minus the deductible. If you still owed $20,000 on your loan, gap insurance would pay the remaining $5,000.

When should I buy gap insurance?

You’ll usually need to buy gap insurance within three years of buying a new car at a minimum. Although insurers guidelines vary, a company may require one or both of the following:

  • Your car is no more than two to three years old.
  • You are the original owner of the vehicle.

Once your car is no longer new, gap coverage usually expires. Some companies may require you to call and remove it.

Gap insurance providers

There are three main ways to buy gap insurance:

  • From your auto insurer, as part of your regular insurance payment.
  • From a company that sells gap insurance only for a one-time fee.
  • Through the dealership or lender, rolled into your loan payments. With this arrangement, you’re paying interest on the cost of your gap insurance over the life of the loan.

Insurance companies that sell gap coverage

Some of the largest insurance companies that offer stand-alone gap insurance as add-ons to car insurance policies are:

  • American Family.
  • Auto-Owners Insurance.
  • Liberty Mutual.
  • Nationwide Insurance.
  • Safeco.
  • Travelers.
  • USAA.

Other companies may sell gap insurance or a similar policy as part of a loan or lease. For example, if you finance your car directly through the insurer’s bank, you can get gap coverage from State Farm, but not on an auto policy.

Stand-alone gap insurance is typically sold online through a one-time purchase from a website such as Gap Direct.

Through your dealership or lender

Gap coverage is part of the loan or lease when you buy through your dealership or lender. This means you’d pay interest on your insurance.

To avoid paying interest, NerdWallet recommends buying gap coverage through your auto insurer. You generally need gap insurance for just a few years until the gap between what you owe and what the car is worth closes. Not all car insurance companies provide gap coverage or an equivalent or offer it in all states, so you may need to switch companies.

Although some lenders may require gap insurance, it’s unlikely. If they do, ask to see where it’s stated in your contract. However, your lender or dealer will generally require you to buy comprehensive and collision coverage.

A dealer may also automatically include gap insurance if you lease your car, so make sure to check your loan or lease agreement. Either way, you don’t have to buy gap insurance from your dealer or lender. You can request to remove coverage from your contract, even if you have already purchased the policy.

How much does gap insurance cost?

Auto insurers typically charge a few dollars a month for gap insurance or around $20-$40 a year. Your cost depends on individual factors like your car’s value. You’ll also need to buy comprehensive and collision coverage. To find the best company for you, compare car insurance rates with at least three insurers.

Lenders may charge a flat fee of $500 to $700 for gap insurance, according to United Policyholders, a nonprofit consumer group. If you finance the car through a credit union, gap coverage may be less. But remember, if you add the coverage to your loan, you’ll also pay interest on it.

If you purchase stand-alone gap insurance online, it’ll typically cost around $300 one time.

Is gap insurance worth it?

Gap insurance may be worth it if you:

  • Made a small down payment on a new car, or none at all.
  • Agreed to a loan term longer than 48 months.
  • Drive a lot, which reduces a car’s value more quickly.
  • Lease your car.
  • Bought a car that depreciates faster than average.

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Alternatives to gap insurance

Gap insurance isn’t the only way you can protect yourself if your car is stolen or totaled.

Loan/lease payoff

An alternative to gap insurance is called loan/lease payoff. Gap insurance and loan/lease payoff differ in a few key ways, although some insurers use the two terms interchangeably.

Gap insurance is available only if you have a new car, but loan/lease payoff may be available for used cars. Additionally, loan/lease payoff pays a set percentage of your car’s value, often around 25%, on top of the claim check instead of your debt balance. Always check the details of your policy to determine exactly what is covered.

Major insurance companies that offer loan/lease payoff include:

  • Esurance.
  • Farmers (it’s called “residual debt endorsement”).
  • Progressive.

New car replacement

If you’re more worried about buying a new vehicle than paying off your old one, new car replacement coverage might be a better choice for you. New car replacement coverage helps pay for a new car of the same make and model, minus your deductible, to replace your vehicle.

While some insurers sell both new car replacement and gap insurance, many offer only one or the other. New-car replacement insurance generally applies to newer cars only.

Companies that sell new car replacement include:

  • Allstate.
  • Farmers.
  • Liberty Mutual.
  • Safeco.
  • Shelter Insurance (included with an auto policy).
  • Travelers.

Better car replacement

If you don’t have a new car, you may not be able to buy new-car replacement coverage or gap insurance. Your insurer may offer better car replacement as an alternative.

Companies that sell better car replacement include:

  • Acuity.
  • Chubb (included in auto policies).
  • Erie.
  • Hanover.
  • Liberty Mutual.

For example, Liberty Mutual will pay for a vehicle that is one model year newer and has 15,000 fewer miles than your totaled car.

gap insurance through dealership


AliExpress is a massively popular Chinese online retail service owned by Alibaba Group. It was launched in 2010 and hasn’t stopped its journey to becoming the ‘biggest online marketplace of the world‘ ever-since. AliExpress stands toe-to-toe even with Amazon in terms of buyers worldwide. It offers wholesale goods at direct-to-consumer prices from Chinese sellers.


It also works as a great dropshipping model for a lot of e-commerce entrepreneurs. Along with a lot of good sides, AliExpress has some cons as well. The biggest problem is the shipping time of AliExpress orders, which is pretty long considering the goods come from China. Also, some orders can be very expensive after shipping charges and taxes.

So, it is a good thing to have some AliExpress alternatives whenever you don’t like its services. That’s why we are telling you about 21 best sites like AliExpress. Some of these websites offer cheaper prices and faster shipping on certain products. And, you can also use them to maintain a nice profit margin for your dropshipping business.


LightInTheBox is the perfect AliExpress alternative as it is also a Chinese e-Store. It sells hot and trending products across the globe. Their products range from phone and electronics to fashion, jewelry, shoes, bags, and many other items. You can find almost anything here at a very cheap price.

The delivery time of LightInTheBox is also similar to AliExpress as their warehouses are located only in China. But, you may get a faster shipping time due to having fewer orders to ship. You can pay for your orders with PayPal, Western Union, or your credit card.


Wish is a widely popular online marketplace where you can buy almost anything. From clothing to footwear, electronics, healthcare items, and many more things, you can get them all for an incredibly cheap price. They are also known to offer great deals and coupons to their new customers.

Their shipping time is also faster than AliExpress as their products come from sellers located in small countries. Wish also provides an advanced rating system that is very helpful for both the consumers as well as sellers. It helps promote good ones.


Overstock is a US-based online marketplace. It makes profit by selling wholesale products at a highly cheap price tag. A major portion of their stock is comprised of overstock from the major retailers or their seconds. You can find some really amusing deals here. The shipping time will also be lower as compared to the Chinese marketplaces. You can get your items within a week.

The product range of Overstock is incredible. You can find everything such as clothing, decor, kitchen appliances, and many more items. You can even find furniture and other big home items. So, you can use to fill your house with great stuff at a reduced price.


DealeXtreme, more popularly known as DX, is an amazing online marketplace. The website works in a very similar manner as ‘Wish’ and sells cheap products coming directly from sellers. It has partnered with many small businesses and sells its products to a wide base of audience.


The shipping time is a problem with DX also because their warehouses are located in China. Apart from this, you can get some really worthy deals on DX. You should always keep an eye on their clearance sales for the best prices.


Gearbest is the perfect AliExpress alternative if you are looking to shop for the latest gadgets or electronic devices. It works with over 5000 Chinese brands and top suppliers to deliver the best products. It has products from top Chinese companies such as Xiaomi, Huawei, Lenovo, and many others. But, it isn’t just an electronic store.

You can also find a massive range of other products as well. The prices available on GearBest are reduced, and you can even reduce them with the available coupons. They also have warehouses in multiple countries. So, you can get faster shipping from the local warehouse.


BangGood is another Chinese e-commerce platform that provides worldwide shipping of cheap goods. You can find almost anything on this website, from clothing to electronics, and even home items. The prices available are marked down from their original prices. You can also get amazing deals during special clearance sales.

BangGood provides a free $20 coupon to every new user. The shipping time for BangGood orders is faster than AliExpress for certain products. However, the regular shipping time is similar.


ChinaBrands is a widely popular Chinese e-Store where you can buy products at wholesale prices. You can find almost anything on this website at a highly affordable price. Their shipping prices are also low but you will get a long shipping time. It is the perfect website for buyers who want the lowest prices but can wait for their orders for at least a month.

Most of the ChinaBrands sellers run their factories from China, and their warehouses are located there only. This is the reason for the considerably long shipping time.


Bonanza is a unique American online marketplace where you can find a great range of products. They have over 20 million items from more than 50,000 sellers. It is a growing e-commerce store where even you can sell your items. It is a preferred platform by more than 20,000 entrepreneurial sellers. You can find some really amazing handcrafted items and collectibles here.

For people looking to shop regular items, this store may disappoint you a little. The prices of some items may be a little higher than some Chinese stores. But, the quality provided will be worth it.


Here are 21 AliExpress Alternatives that you can use to shop online.

  1. LightInTheBox
  2. Wish
  3. Overstock
  4. DealXtreme (DX)
  5. GearBest
  6. BangGood
  7. ChinaBrands
  8. Bonanza
  9. DHGate
  10. TinyDeal
  11. Target
  12. MiniInTheBox
  13. GeekBuying
  14. Jet
  15. TomTop
  16. Target
  17. MadeInChina
  18. American Greenwood
  19. Walmart
  20. eBay
  21. Amazon


AliExpress is amazing but it is always good to have options when you are shopping. So, these are the 21 best sites like AliExpress. If you ever feel like you should look somewhere else, these are some stores that you should visit. You can also use these for your dropshipping business if you are an aspiring entrepreneur. Make sure you have a solid plan before beginning.

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