Enrolling in auto insurance in Colorado is typically a straightforward process; however, when residents lease a new vehicle, they are often unsure if they should add guaranteed asset protection, or gap coverage, to their policy. For some, this type of insurance is a wise decision, as it can offer motorists an immense amount of peace of mind.
If you’re shopping for a new vehicle and evaluating your auto insurance options, visit Insurify today. You can view real-time quotes from multiple insurers and find the insurance policy that best meets your needs. Colorado drivers interested in gap insurance coverage can also explore various options through Insurify.
What is gap insurance?
Purchasing a new vehicle is exciting, but did you know that the value of your car will drop considerably during the first several years you own it? This depreciation rate, which can amount to over 20 percent by the end of the first year, often leaves a gap between the value of the car and your loan balance, which sometimes totals thousands of dollars.
If you’re involved in a collision that results in a total loss, you’re responsible for bridging the financial gap after your insurance policy pays toward your claim. Gap insurance covers this difference and helps you pay off your car loan. Sometimes called a gap waiver, it’s best for new cars and can be purchased from an insurance company or an auto dealership.
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Who should buy gap insurance in Colorado?
Enrolling in a gap insurance policy is something that every driver of a new car should consider, but there are some individuals who would benefit from this protection more than others. If you’re leasing a vehicle, it’s wise to add this protection to your policy. Drivers who placed a minimal down payment on their vehicle may also want to enroll in gap coverage.
You’ll want to consider what would happen should you suffer a total loss of your vehicle. Is the actual cash value of your car similar to your loan amount? Or would you be responsible for making payments on your auto loan long after your vehicle is gone? Some Colorado drivers find that gap coverage offers them financial peace of mind that’s well worth the additional cost.
Colorado Gap Insurance Laws
Unlike auto insurance, which is required for every Colorado driver, gap coverage works a bit differently. When you purchase a new vehicle, auto dealerships are required by law to offer you this protection and cannot make the approval of your auto loan contingent upon your enrollment in gap coverage. It’s your right to either purchase or decline gap coverage at that time.
Should you decide that guaranteed automobile protection is right for you, Colorado law places a limit on the gap fee charged by the dealership or insurance company. This fee cannot exceed $300 or 2 percent of the amount of the car loan, whichever is higher. If you pay off your loan early, Colorado law also stipulates that you’ll receive a partial refund of your gap premium.
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How much gap insurance do I need in Colorado?
Gap insurance is priced differently from a car insurance policy in that there are no deductibles or policy limits to decide between. Individuals who enroll in this protection are guaranteed coverage that bridges the difference between what their insurance pays and their payoff amount in the event of a total loss.
How Gap Insurance Works in Colorado
Gap insurance can be obtained from your insurance company, an auto dealership, or a lender like a bank or credit union. Drivers in Colorado are offered the option to purchase this protection when they finance a new vehicle and, if they enroll, may change their minds within a 30-day cancellation period.
Individuals who maintain gap coverage throughout the life of their auto loan often experience greater peace of mind, as they know they will be protected in the event of a total loss. Should your car get stolen or damaged to the point that it is inoperable before you finish paying off your loan or lease, gap protection will kick in.
After you pay your insurance deductible and receive payment from your insurance company for the actual cash value of your vehicle, your gap coverage will provide funds to pay off the rest of your loan. For many, this payment could be several thousands of dollars and can make a true financial difference in this situation.
How Much Gap Insurance Costs in Colorado
Colorado drivers are likely used to a range of pricing options when it comes to auto insurance, but with gap protection, things are far more straightforward. Motorists will find that pricing may vary between lenders or insurance carriers but is still available for a minimal cost. It’s best to price shop for gap coverage and then enroll in the policy that works best for your budget.
How to Buy Gap Insurance in Colorado
Individuals may feel pressured to purchase guaranteed automobile protection by an auto dealership, but it is well within the rights of Colorado residents to decline this coverage in favor of price shopping. It’s important to remember that gap coverage is not meant to replace auto insurance but instead acts as an add-on type of coverage.
Ultimately, Colorado drivers should visit Insurify to compare auto insurance policies before they make a purchase. You’ll be able to view quotes from a range of carriers that include robust coverage along with gap protection and can enroll in a new policy in just a matter of minutes. Insurify saves you time and money on your gap coverage.
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Best Companies for Gap Insurance in Colorado
Finding affordable coverage that includes comprehensive and collision insurance along with gap protection is possible for many Colorado drivers. It’s best to do some research before you enroll, as motorists may be able to purchase auto insurance at prices similar to these:
|Colorado Insurance Provider||Monthly Premium|
Check out our piece on the best gap insurance companies for more information!
Frequently Asked Questions: Gap Insurance in Colorado
Does Colorado law require gap insurance?
Drivers in Colorado are not required to enroll in gap coverage; however, lenders must make this protection available to anyone financing or leasing a vehicle. Designed to be an add-on to your auto insurance, it can offer peace of mind to drivers with a high auto loan balance.
Do you get money back from gap insurance once you’ve paid off your car?
Colorado law dictates that drivers who pay off their car loan early must be refunded a portion of their gap premium. It’s best to check with the company that you purchased this protection from to find out if there are any exclusions to this policy. Drivers who do not pay off their car early may not be eligible for any money back.
Where can I find cheap gap insurance in Colorado?
Purchasing guaranteed asset protection doesn’t have to be a lengthy process, as Colorado residents can find the best coverage for their needs with Insurify. Simply answer a few questions about your vehicle, and view real-time quotes that include gap coverage from a range of carriers. Save time and money today with Insurify.