Insurance offers protection from unwanted financial surprises. If your car is totaled, for example, comprehensive, collision, or property damage can cover your losses.
But what if you owe more than your car is worth? In this situation, there’s a critical gap between how much money you have outstanding on your car loan and how much an insurance company is willing to pay out.
Car insurance comes in all shapes and sizes. It’s crucial not only to understand your coverage but to know you’re getting the best price for your policy. Get up to speed on all you need to know about auto insurance with Insurify’s educational content. Then, get fast quotes from top-rated car insurance companies in minutes using Insurify’s car insurance comparison tool.
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What is gap insurance?
Gap (guaranteed asset protection) insurance coverage protects you if your car is stolen or totaled and you owe more than it’s worth. Because insurance pays only a car’s actual cash value (ACV), how much you have left on your loan isn’t considered. Gap insurance covers the amount you owe on your car loan if you’re upside down and owe more than your car is worth.
Though not all dealers require gap insurance, you’ll be required to carry it if you lease a vehicle. Dealerships offer gap waivers. Gap waivers are similar to gap insurance in that they serve the same purpose, but gap waivers are usually rolled into the price of your vehicle and paid for up front. Gap insurance is a stand-alone insurance product that you pay for monthly.
Who should buy gap insurance in Massachusetts?
Motorists whose car down payments are less than 20 percent or have financed vehicles for 60 months or longer should consider gap insurance. Additionally, you should consider this coverage if you purchase a new vehicle that can depreciate faster than average or if you rolled over negative equity into your new loan.
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Massachusetts Gap Insurance Laws
Massachusetts law doesn’t require gap insurance coverage. But that doesn’t mean you shouldn’t consider it. If you have a longer loan and a lot of interest to pay, you may pay off your car more slowly than you realize. Couple that with the fact that your car depreciates as soon as it hits the street, and you could find yourself having to pay off what’s left on the loan after an insurance payout.
How much gap insurance do I need in Massachusetts?
Gap insurance is an insurance product that you can add to your existing car insurance coverage through an insurance agent. A major insurer will typically price gap insurance coverage at 5 to 6 percent of the collision and comprehensive premiums on your auto insurance policy. According to the Insurance Information Institute, gap insurance only adds about $20 a year in cost to your annual premium.
How Gap Insurance Works in Massachusetts
Let’s say you owe the lender $30,000 on your new car. You’ve put a few miles on it, and after some wear and tear, its market value is $27,000. Should you get in an accident and the insurance company claims it a total loss, you will get the $27,000 under the collision and/or comprehensive coverage once you pay your deductibles. Your gap coverage will pay the remaining $3,000 left on your auto loan.
How Much Gap Insurance Costs in Massachusetts
Gap insurance doesn’t cost a ridiculous amount of money. It may, in fact, cost you only $20 a year in addition to your annual premium if you buy through an auto insurance company. This amount doesn’t include the comprehensive and collision insurance that you’ll need to carry to cover the cost of damages or theft.
You may pay more rolling gap insurance into the cost of your car loan at the dealership because you’ll be paying interest on top of the total price. In addition, you’ll be paying up front for the entire product. It’s often cheaper to get gap coverage together with your car insurance policy from the same insurance company.
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How to Buy Gap Insurance in Massachusetts
Massachusetts motorists have several choices when searching for where to buy gap insurance. You can purchase gap insurance from an insurance broker or purchase a gap waiver sold by a finance company through the car dealership. If you aren’t happy with the dealership’s options, you can shop insurance providers for gap and other insurance coverage.
Comparing one insurance agency to another to find the cheapest gap policy is easy using Insurify. This way, you can pay your gap insurance as monthly premiums along with the rest of your insurance coverage instead of paying for gap plus interest up front.
Best Companies for Gap Insurance in Massachusetts
We’ve run the numbers, and according to Insurify data, Travelers, Midvale, and Liberty Mutual provide the cheapest insurance quotes (including gap coverage) in Massachusetts.
|Massachusetts Insurance Companies||Monthly Gap Insurance Premium|
Check out our piece on the best gap insurance companies for more information!
Frequently Asked Questions: Gap Insurance in Massachusetts
Does Massachusetts law require gap insurance?
Though Massachusetts law doesn’t require gap insurance, your car leasing agent may require that you have it. In this case, you can ask to have the gap coverage rolled into your loan, or you can purchase gap insurance separately from an insurance provider.
Do you get money back from gap insurance once you’ve paid off your car?
Yes, gap insurance refunds are a thing. For example, if you paid 36 months of gap coverage up front, but you traded, sold, or paid off your car in 24 months, you are eligible for a refund for the 12 months of unearned premiums. Contact your insurance provider to understand the exact details and requirements for the refund.
Where can I find cheap gap insurance in Massachusetts?
Massachusetts motorists don’t need to feel pressured into buying gap insurance directly from the dealership, even if this type of coverage is required. Before you commit, scour hundreds of cheap options using Insurify. This top insurance shopping platform returns real-time custom quotes from regional and national insurance companies in minutes.