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Updated June 15, 2022
Gap Insurance in New Jersey
Gap insurance—which stands for “guaranteed asset protection”—is an additional car insurance coverage that lenders in New Jersey may require if you are financing a new car. Not everyone needs a gap insurance policy, but you should consider it to avoid high out-of-pocket costs in the event of a total loss accident or theft. Insurify is an AI-powered comparison tool that can give you access to 10+ real-time gap insurance quotes in under five minutes. Check it out today!
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Best Companies for Gap Insurance in New Jersey
How much is gap insurance in New Jersey?
The average cost to insure a leased vehicle in New Jersey is about $250 per month. However, what you pay for gap insurance will largely depend on whether you buy gap insurance from your car dealership or from your insurance provider.
It’s important to shop around for car insurance before committing to one auto insurance company because car insurance costs can vary drastically from provider to provider. In New Jersey, average car insurance costs for leased vehicles can go as high as $377 and as low as $172, amounting to a $2,460 difference in annual premiums.
You can find more average monthly costs for some of the best car insurance companies in New Jersey below. This table shows data specifically for leased vehicles.
|Insurance Company||Average Monthly Cost for Leased Cars in New Jersey|
|Midvale Home & Auto||$283|
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What is gap insurance?
The value of your car depreciates 20 to 30 percent within the first year. In five years, it goes down over 60 percent. Despite this depreciation in actual cash value, you still owe the same amount you originally took out on your car loan. This difference—owing on your car more than it’s actually worth—is called negative equity or being “upside down” on your car.
If you lose your car as a result of a total loss accident or theft, your auto insurance will reimburse you for the actual cash value of your car at the time of the accident—not for the amount you owe on your auto loan. As a result, you will have to keep making monthly payments to pay off a car you no longer drive.
Gap insurance covers the gap between what you owe on your car and its actual cash value. For example, you finance $20,000 for a new vehicle. At the time of a total loss accident, your car is worth $10,000, but you still owe $15,000 on it. Your insurance company will reimburse you for the ACV—$10,000—still leaving you $5,000 in debt. Gap insurance covers this difference.
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Who should buy gap insurance in New Jersey?
Not everyone needs gap insurance. If you own your car or made a large down payment of over 20 percent on a car you financed, you don’t need to purchase gap insurance because your chances of ending up with negative equity are low.
However, gap insurance is absolutely worth it in the following circumstances:
You are financing your new vehicle. Generally speaking, the only exception to this is if you made a down payment of over 20 percent. Driving a car that is worth less than what you owe on it is incredibly risky.
You have a long-term loan or leasing agreement. If it is going to take you over 60 months to pay off your vehicle, there’s a high probability you will end up owing more on it than its actual cash value.
You already have negative equity from your past car loan. If your auto loan rolled over, protect yourself against high total accident and theft costs with gap insurance.
You are financing a car and are planning on driving long distances. Regularly covering long distances makes your vehicle’s value depreciate much faster. The faster its value depreciates, the higher your chances are of ending up with negative equity. So if you know you are going to have high mileage, get gap insurance coverage.
You are financing a luxury vehicle. Certain car models, such as sports cars, depreciate much faster than others, which increases your chances of being “upside down” on your car.
New Jersey Gap Insurance Laws
Gap insurance is not required by law for New Jersey drivers. New Jersey law only requires you to carry the minimum liability insurance, with $15,000 per person and $30,000 per accident in bodily injury coverage and $5,000 in property damage. While this is the only type of coverage required, it’s not sufficient to provide enough coverage in the event of a car accident.
For this reason, many drivers decide to get optional coverage, such as comprehensive coverage and collision coverage with gap insurance as an add-on. Plus, your lending institution may also require you to purchase additional car insurance policies, especially gap insurance. To find the cheapest full-coverage car insurance policy, use Insurify.
How much gap insurance do I need in New Jersey?
How much gap insurance you need as a New Jersey driver depends on how fast your vehicle is predicted to depreciate, how much you owe on it, and your personal preferences. To calculate how much gap insurance coverage you need to get, estimate your projected negative equity: the difference between what you owe on your car and how much it is going to be worth.
See More: How Much Car Insurance Do I Need?
How Gap Insurance Works in New Jersey
Gap insurance is available as an add-on to your existing comprehensive and collision coverage or as a stand-alone policy.
It’s important to know that gap insurance only covers the difference between what you owe on your vehicle and its actual cash value in the event of a total loss or theft. If you are using your car insurance to cover the damages from a car accident that did not result in a total loss, you would need to use your comprehensive and collision insurance.
Gap insurance also does not cover medical bills, lost wages, or the value of your car or loan balance if your vehicle is repossessed. Plus, it’s important to note that some insurance providers in New Jersey don’t offer gap insurance for used vehicles. Find a car insurance company in New Jersey that offers gap insurance to used cars within minutes using Insurify.
How Much Gap Insurance Costs in New Jersey
On average, you can expect monthly car insurance costs for leased vehicles in New Jersey to be around $250. If you purchase your gap insurance as an add-on to your full-coverage policy, it can cost you as little as $20 per year on top of your regular auto insurance premiums.
You can also get your gap insurance policy from a car dealership, a bank, or an auto insurance company as a stand-alone policy. However, you can expect much higher costs if you go down this route. You can see flat fees of $500–$700+ if you purchase a gap insurance policy from a dealership and flat fees of $200–$300 if you get it from a car insurance company as a stand-alone policy.
How to Buy Gap Insurance in New Jersey
The easiest and cheapest way to get a gap insurance policy is as an add-on to your existing full-coverage policy. If you don’t have existing comprehensive and collision coverage, start looking for car insurance companies that offer full coverage as well as gap insurance as an add-on.
According to Insurify data, you should get at least four quotes from different auto insurance companies to find the cheapest deal with the most coverage. But researching which companies in New Jersey offer gap insurance and requesting quotes from each of them can turn out to be quite stressful and time-consuming.
Instead of spending hours answering the same questions over and over to get quotes from different insurance companies and then manually comparing them to find the best option for you, use Insurify to instantly get 10+ real-time, cheap car insurance quotes tailored to your preferences and needs. Insurify users save an average of $489 a year!
Frequently Asked Questions: Gap Insurance in New Jersey
New Jersey law does not require drivers to carry gap insurance—only the minimum liability coverage. However, if you are financing your vehicle, your lending institution may require you to purchase gap insurance as an add-on to comprehensive and collision coverage. To find the cheapest deal with the best coverage and deductibles, use Insurify.
It is possible that you may receive a refund for the unused portion of your gap insurance premium if you paid for your gap insurance policy in advance and paid off your car early. However, this depends on your particular insurance provider and their policies. Use Insurify to find the best car insurance company in New Jersey that fits your personal preferences.
The cheapest way to find gap insurance coverage in New Jersey is to get it as an add-on to your existing full-coverage policy. If you do not have comprehensive and collision insurance, you can use Insurify to compare cheap car insurance quotes from the best auto insurance companies in New Jersey that offer gap insurance, and find the best deal for you in minutes.
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Data scientists at Insurify analyzed over 40 million auto insurance rates 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. With these insights, Insurify is able to offer drivers insight into how their car insurance premiums are priced by companies.