Gap Insurance in Arkansas (2024)

Gap insurance — also known as guaranteed asset protection — can help protect your finances if you have an auto loan or lease and your car is totaled or stolen. After your vehicle is declared a total loss, the insurance company typically pays out its current market value — not the amount you owe. 

Gap coverage helps pay the difference between the actual cash value (ACV) of the car and the remaining balance on your loan or lease, if there is one.

Here’s what you need to know about securing gap insurance in Arkansas.

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What is gap insurance and how does it work?

Everyone knows that cars depreciate quickly. When you file a comprehensive or collision claim, the insurance company pays the vehicle’s ACV in the event of a total loss. However, the compensation you receive may be less than what you owe on your car loan or lease.^[1] In these situations, it’s up to you to make up the difference.

With gap insurance, the insurer covers the difference between the car’s value and what you owe. Without it, you’d have to keep making monthly payments on a vehicle you no longer own or pay off the loan or lease in a lump sum.

What gap insurance covers in Arkansas

Gap insurance policies can help prevent out-of-pocket expenses after a total loss or theft. They can also protect you from rolling negative equity into your next auto loan or lease.

Here’s an example of how gap insurance works.

Say you buy a car for $45,000. A year later, you’re in an accident and the insurance company declares it a total loss. The ACV of the vehicle is $37,000 at the time of the accident. However, you still owe $41,000 on your auto loan.

In this case, your insurer would cut the lender a check for $37,000 — minus your deductible — under your collision coverage.^[2] If you have gap insurance, it will cover the $4,000 you owe to the lender. If you don’t have gap coverage, you must pay the difference yourself.

Gap insurance vs. full coverage

Full coverage includes a combination of liability, collision, and comprehensive coverages. It doesn’t include gap insurance.

Liability insurance covers your responsibility to others if you’re at fault in an accident.^[3]

Comprehensive and collision coverages pay out the fair market value of the vehicle if a total loss or theft occurs. But full coverage doesn’t pay the difference if you owe more than your car is worth. Adding gap insurance provides an additional layer of protection if you have an auto loan or lease.

Who needs gap insurance in Arkansas?

Gap insurance is an optional coverage in Arkansas and isn’t necessary for every driver. However, it may be a good idea if you:

• Own a car that depreciates faster than average

• Put little money down when you bought your vehicle

• Have an extended loan term

• Put more miles on your car than the average driver

These scenarios increase the likelihood that you’ll be underwater on your auto loan if your insurer declares your vehicle a total loss within your first few years of owning it. If you lease your vehicle, the leasing company will likely include gap insurance in your contract. However, you don’t need to buy it to qualify for a car loan.

You don’t need gap coverage if you don’t have an auto loan or lease. If you made a large down payment when you purchased your car and don’t owe more than the vehicle is worth, you can probably skip this coverage.

How to buy gap insurance in Arkansas

You can purchase gap insurance coverage whether you have a used or new car, as long as you meet the insurer’s requirements. You can purchase gap insurance at any of the following:

• Car dealerships: You can buy coverage from the dealer when you purchase your vehicle.

• Insurance companies: Many, but not all, traditional insurers offer gap insurance. You can usually add gap coverage to your existing auto insurance policy if you have comprehensive and collision coverages.

• Lenders: Banks and credit unions may offer gap insurance as part of your loan agreement when you finance your vehicle.

• Stand-alone gap providers: Some online companies offer gap coverage as a stand-alone product that you can purchase separately from your auto insurance company.

The cost of gap insurance can vary significantly, depending on where you buy it. Consider consulting an independent insurance agent or lender to compare quotes between plans for the best rate.

Best gap insurance companies in Arkansas

Many auto insurers in Arkansas offer gap insurance that can help protect your finances if you’re upside down on your auto loan or lease. Here’s a list of the best car insurance companies in Arkansas that provide gap insurance.

State Farm

USAA

Auto-Owners

Allstate

Shelter

Nationwide

How Insurify rates car insurance companies

Data scientists at Insurify analyzed more than 40 million real-time auto insurance rates from our partner providers across the United States to compile the car insurance quotes, statistics, and data visualizations displayed on this page.

The car insurance data includes coverage analysis and details on drivers’ vehicles, driving records, and demographic information. Quotes for Allstate, Farmers, GEICO, State Farm, and USAA are estimates based on Quadrant Information Services’ database of auto insurance rates.

With these insights, Insurify is able to offer drivers insight into how companies price their car insurance premiums. The data included on this page represent averages across driver ages, genders, credit scores, and driver profiles for Arkansas drivers.

Gap insurance in Arkansas FAQs