Does Allstate Sell Gap Insurance?
Last Updated on September 30, 2022
If you need gap insurance to cover the gap between the value of your vehicle and the amount remaining on your loan or lease, then Allstate is one option.
Allstate, like many of its competitors, sells gap insurance across the United States. Allstate calls it “Guaranteed Asset Protection (GAP)” coverage, and it can help you avoid paying thousands of dollars out of pocket after a total loss insurance claim.
Keep reading to find out everything you need to know about Allstate’s gap insurance and how it works.
Table of Contents:
- How Allstate’s Gap Insurance Works
- Benefits of Allstate’s GAP Insurance
- Do I Need to Buy Allstate’s GAP Insurance?
- Allstate’s GAP Coverage: An Example
- Is Allstate’s GAP Coverage Worth It?
- Allstate GAP Insurance Requirements
How Allstate’s Gap Insurance Works
Allstate sells gap insurance to most drivers across the United States. If you are leasing or financing a vehicle and have full coverage car insurance with Allstate, then you should be able to add gap insurance to your policy for a few extra dollars per month.
Allstate’s gap insurance works similarly to the gap insurance provided by other major providers. Here’s how it works:
- Allstate calls its gap insurance “Guaranteed Asset Protection” or “GAP” coverage.
- Allstate’s GAP insurance helps cover what you owe on your vehicle loan or lease if you experience a total loss before paying off the full value of your loan or lease.
- If you are involved in a total loss accident or if your vehicle is stolen, then Allstate’s GAP coverage covers the difference between the value of your vehicle (the payment you receive from Allstate after the loss) and the amount owing on your vehicle’s lease or loan (the amount of money you must pay the dealership, financing company, or leasing company).
Many drivers buy GAP insurance to help protect new cars. A car’s value may drop 10% or more the moment you drive it off the lot. If you get into an accident within the first few months of ownership, then you could receive thousands of dollars less from Allstate than what you owe for the vehicle. Unless you have Allstate’s GAP insurance, you must cover this gap out of pocket.
Benefits of Allstate’s GAP Insurance
Allstate’s Guaranteed Asset Protection (GAP) insurance plans provide the following benefits:
- Protection for new and used vehicles valued or financed up to $50,000
- Receive reimbursement for your primary auto insurance deductible up to $1,000
- Waives covered losses up to $50,000
- Covers personal use vehicles and many light-duty commercial use vehicles under the same GAP waiver
Do I Need to Buy Allstate’s GAP Insurance?
Allstate does not require you to buy GAP insurance on a new vehicle, nor do any state laws require you to buy GAP insurance.
However, if you are leasing or financing a vehicle, then your leasing or financing company (or car dealership) may require you to buy gap insurance – like Allstate’s GAP coverage.
In fact, some leasing and financing companies build GAP coverage into your lease or loan payments. You may already be paying for GAP coverage through your monthly installments. Check your leasing or financing paperwork. Otherwise, after buying Allstate’s GAP coverage, you could be doubly insured with gap insurance.
Allstate’s GAP Coverage: An Example
Allstate’s Guaranteed Asset Protection (GAP) coverage could help you avoid paying thousands of extra dollars out of pocket after a loss.
To understand the value of Allstate’s GAP coverage, here’s an example:
- You buy an SUV for $50,000 from a dealership with $0 down, financing car payments over 84 months.
- The moment you drive your SUV off the dealership’s lot, your SUV has dropped 10% in value, which means it’s only worth $45,000. After three months, your SUV may only be worth $42,000, regardless of what you still owe for the vehicle.
- 3 months after buying the SUV, you are involved in a total loss accident. You file a claim through your Allstate collision coverage. You pay your $1,000 deductible, and Allstate reimburses you for the full cash value of your vehicle at the time of the loss, which was assessed at $42,000.
- You now have a check for $42,000. However, you still owe the dealership or financing company roughly $50,000 for your vehicle.
- If you have Allstate’s GAP coverage, then this GAP coverage would cover the $8,000 gap between the value of your vehicle and the amount remaining on your loan. That GAP coverage would also cover the $1,000 deductible you just paid.
- If you don’t have Allstate’s GAP coverage, then you must cover this $8,000 gap out of pocket.
Is Allstate’s GAP Coverage Worth It?
Many drivers find Allstate’s GAP coverage is worth it – especially on newer vehicles with negative equity. Even if you’re a safe driver with no history of accidents, a single mistake could cost you thousands of dollars in out-of-pocket costs.
Here are some of the things to consider before buying Allstate’s GAP coverage:
Peace of Mind: Some drivers are willing to pay extra for peace of mind. They like the idea that a single accident will not cost them thousands of extra dollars in out-of-pocket expenses.
Small Monthly Cost: Allstate’s GAP coverage could cost anywhere from $5 to $50 per month, depending on your driving history and vehicle type. For as little as a few extra dollars per month, you could have significantly better protection after an accident.
May Be Required for Your Loan or Lease: Some leasing and financing companies require gap coverage as part of your agreement. It protects the collateral of your loan. If you don’t have gap coverage – like Allstate’s GAP insurance – then you could be in violation of that loan or lease.
Did You Make a Small Down Payment or Setup a Long Financing Plan? If you paid a small down payment for your vehicle (less than 20%), or if you setup a long financing plan, then you have a higher chance of having negative equity on your vehicle. That means your vehicle is worth less than what you owe. If you have negative equity, then Allstate’s GAP insurance could be worth it.
Overall, Allstate’s GAP insurance protects against depreciation, helping you avoid paying thousands of extra dollars out of pocket after vehicle theft or a total loss accident.
Allstate GAP Insurance Requirements
Most drivers can easily add GAP insurance to their Allstate policy without issue. However, you must meet two basic requirements to add GAP insurance, including:
Must Have Full Coverage Car Insurance: Allstate typically only sells GAP insurance to policyholders with full coverage car insurance. Full coverage car insurance includes collision and comprehensive coverage. Most new vehicles have full coverage car insurance, and many dealerships require full coverage car insurance on leased or financed vehicles.
Final Word – Allstate GAP Insurance
Like many car insurance companies, Allstate sells gap insurance to drivers who want added protection. Allstate’s Guaranteed Asset Protection (GAP) insurance covers the difference in value between your vehicle and the amount remaining on your vehicle’s loan or lease.
To learn more about Allstate’s GAP insurance or to add GAP insurance to your policy today, contact Allstate.