Have a look at our online inventory and find the perfect car for your needs in Long Island City. Then you may be wondering what kind of insurance you’ll need. Gap insurance is a common type of insurance that covers a lot if your car is totaled in an accident. How much does gap insurance cost? The price of your coverage will depend on where you get it: from an insurance company or added to your car loan. Talk to the experts at Major World to find out how much gap insurance usually costs. Then, get in touch with our team to learn more about our coverage options.
The average cost of gap insurance will depend on where you acquire it in Queens. You have a few options when it comes to where you purchase your gap insurance, see them below:
Gap insurance is an optional add-on coverage that helps protect car owners financially if their new vehicle is totaled or stolen It pays the difference between what your car insurance will pay out (the depreciated cash value) and what you still owe on your loan. Gap insurance can provide significant financial protection, but how much does gap insurance cost in New York?
The cost of gap insurance in New York typically ranges from $2 to $30 per month. The final price depends on various factors like where you buy it, the value of your vehicle, the size of your loan, and your auto insurance provider While not required in New York, gap insurance can be a lifesaver if your new car is totaled.
What is Gap Insurance?
Also known as guaranteed asset protection or loan/lease coverage gap insurance covers the “gap” between what your car insurance will pay if your vehicle is totaled (the actual cash value or ACV) and what you still owe on your car loan.
For example, say you owe $15,000 on your car loan but your insurer only pays out $10,000 if your car is totaled. Without gap insurance, you’d be responsible for paying the $5,000 difference. Gap coverage pays this difference so you don’t end up owing anything out-of-pocket.
Gap insurance only covers the unpaid loan balance, not the full original vehicle value. It also doesn’t pay for repairs or replacement – only the loan differential in the event of a total loss.
Where to Buy Gap Insurance in New York
There are three main options for purchasing gap coverage in NY:
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From your auto insurance company – Adding gap as a rider to your existing policy is often the cheapest option. Expect to pay $2 to $10 per month.
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From your lender – Convenient at the time of purchase but usually more expensive. You’ll pay $10 to $30 monthly.
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From a dealership – More expensive than insurance but may be required for financing. Cost is bundled into the loan at $300 to $600 total.
Independent gap insurance providers also exist but are less common. Carefully compare all options to find the best rate.
How Gap Insurance Pricing Works
Several major factors determine how much you’ll pay for gap coverage in New York:
Your vehicle value – The higher the car’s value, the higher the gap premium since there’s more loan exposure. Luxury and specialty vehicles cost more to insure.
Loan size – The larger your outstanding loan balance, the more gap coverage costs. Longer loans equal higher premiums.
Where you buy – Insurance companies offer the lowest rates, lenders charge more, and dealers the most.
Your auto insurer – Each carrier prices differently. Compare quotes from multiple providers.
Deductible – A higher deductible leads to a lower gap insurance premium.
Credit score – Just like regular car insurance, better credit means better gap rates.
Age and gender – These demographics can impact gap pricing too. Younger males often pay more.
Length of policy – Gap insurance prices are lowest when purchased for shorter 1-3 year loan terms.
Usage and mileage – Personal use and lower mileage bring cheaper rates.
How Long Should You Carry Gap Insurance?
Most experts recommend keeping gap insurance only until your vehicle’s value exceeds the remaining loan balance. This breakeven point is typically reached within the first 2-3 years of ownership as the vehicle depreciates.
After this point, your regular car insurance payout should be enough to cover any outstanding loan amount if the car is totaled. Carrying gap beyond year three is usually unnecessary and not cost effective.
To determine when you can drop gap coverage, periodically check your loan balance against your car’s estimated value. Online car value estimation tools like Kelley Blue Book and NADAguides can help with this.
Does Gap Insurance Have Deductibles and Copays?
Unlike your regular car insurance policy, gap insurance does not have a deductible that you must pay out-of-pocket. It also does not have any copays or coinsurance costs.
Gap coverage pays the full difference between your loan balance and the car’s ACV, up to the policy limits. You do not have to pay anything extra beyond your monthly premium. Just make sure you continue paying your regular auto insurance deductible if you file a total loss claim.
Alternatives to Gap Insurance in New York
Instead of gap insurance, you may want to consider these alternatives to protect your vehicle investment:
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Put more money down – A larger down payment equals less money financed, reducing your potential loan differential.
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Purchase new car replacement coverage – This pays the cost to replace your vehicle with a new one, which can help avoid any loan-to-value gaps.
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Get an extended warranty – Warranties cover repair costs that could otherwise lead to a totaled vehicle.
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Buy a less expensive car – A cheaper car means lower monthly payments and less overall owed.
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Build up your emergency fund – Having cash reserves helps cover large out-of-pocket costs like loan differentials.
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Refinance your loan – Refinancing to a lower rate/term means owing less over time.
For many buyers though, gap insurance provides the most targeted financial protection against a significantly depreciated totaled vehicle. Carefully weigh the alternatives before declining this optional coverage.
Is Gap Insurance Required in New York?
New York state law does not mandate gap insurance for vehicle owners or lessees. However, most auto lenders and lease companies require you to carry it for the duration of the loan or lease term.
Before financing a new car, double check that gap coverage is included. If not, expect to purchase it separately within 30 days. Declining gap insurance could put your loan approval at risk.
Some lenders allow gap waivers if you make a down payment of at least 20%. You may also avoid gap by paying cash for the entire vehicle purchase amount.
The Bottom Line
Gap insurance in New York costs between $2 and $30 monthly, on average, with insurance companies offering the lowest rates. Exact pricing depends on your vehicle, loan amount, and other individual factors.
While not required, gap coverage provides important protection against owing money if your new car is totaled or stolen. Carefully consider the risks and your own financial situation when deciding if paying for gap insurance makes sense for your new vehicle purchase.
Is The Gap Insurance Price Worth It?
The low cost of gap insurance means that most Bronx drivers will be able to fit it into their budget. You can worry-free drive through Long Island City whether you pay an insurance company about $20 a year or include it in the cost of your car loan. Gap insurance is considered worthwhile by most drivers because of the coverage it offers and its low cost. Gap insurance will pay the difference between how much you still owe on your car and how much it was worth when it was stolen or damaged and your insurance company calls it a “total loss.”
GAP Insurance | Buy from dealer or Insurance company?
FAQ
How much is gap insurance in New York?
Is gap insurance mandatory in NY?
How is gap insurance calculated?
Is gap insurance always worth it?
How do I buy GAP insurance in New York?
The most affordable way to buy gap insurance in New York is to call your insurance agent and add the coverage to your existing car insurance policy. You can purchase a stand-alone policy through a car dealership or a lender, but it’s typically cheaper to buy the coverage as an add-on with your car insurance company.
How does GAP insurance work in New York?
Gap insurance in New York only activates if the car is deemed a total loss and undrivable. This means that for minor bumps and scrapes, gap insurance doesn’t come into play. The vehicle must either be stolen or totaled for gap insurance to pay your remaining loan amount. Gap insurance is most easily understood with some examples.
Do I need GAP insurance if I owe money?
You can generally only add gap insurance to your policy if you still owe money on the vehicle or lease. 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. There are two main ways to buy gap insurance:
Does GAP insurance cover negative equity?
However, not all gap insurance policies will cover negative equity, so make sure you buy a policy that does if you rolled negative equity into your new car loan. When you no longer need gap insurance—because your loan balance is about equal to or lower than your vehicle’s value—you can drop it from your policy.