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Updated June 15, 2022
The last thing you want to think about when driving home after an auto accident is whether your insurance company will cover the cost of your car. If you’re lucky, you have a car insurance policy that covers accidents. But your policy may not completely cover your loss—especially if it’s older or has depreciated significantly in value over time.
More and more New Mexico drivers are learning about gap insurance. Keep reading to discover what gap insurance is, who should get it, and how it works. And if you’re looking for cheap car insurance, Insurify is here to help. Compare quotes from multiple insurance companies with a single click to find the best and most affordable coverage for you.
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Best Companies for Gap Insurance in New Mexico
How much is gap insurance in New Mexico?
The average policyholder in New Mexico pays $206 per month for a car insurance policy with gap insurance. However, what you pay for car insurance will depend on a variety of factors, such as your age and your driving record.
Gap insurance is especially important when you lease a vehicle. New Mexico car insurance for leasing drivers is pretty affordable. Travelers is the cheapest, with an average monthly rate of $139.
|Insurance Company||Average Monthly Cost for Leased Cars in New Mexico|
|Midvale Home & Auto||$157|
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What is gap insurance?
Guaranteed asset protection (GAP insurance) protects you if your vehicle is totaled or stolen while you still owe money on it. The policy covers any difference between what your car is worth and what your loan balance is.
So, if you total your vehicle and the car insurance company won’t pay as much as you owe, the gap can cover that remaining balance. That way, you aren’t left paying on a loan for a vehicle you no longer own.
Because it applies to financed vehicles, the coverage is beneficial only if you’re leasing or financing your car—the dealership or lender you use might require you to buy a gap policy.
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Who should buy gap insurance in New Mexico?
If you’re buying a new car, your New Mexico auto insurance company may try to sell you on gap insurance. Gap insurance can be a necessary coverage to protect your finances in the event of an accident or theft that involves your vehicle. But it isn’t right for everyone.
Gap insurance is best if you:
Put less than 20 percent down when buying a car.
Finance a vehicle that depreciates quickly.
Sign a lease for your vehicle.
Roll negative equity into your new car loan.
Get a loan term of 60 months or more.
If you have a loan on your car, gap insurance might be worth looking into. However, it won’t help you if you paid cash for your car, had a down payment that’s over 20 percent of the car’s market value, or already paid your car loan in full.
New Mexico Gap Insurance Laws
Most states, including New Mexico, have insurance requirements for drivers to purchase auto liability insurance. Drivers in the Land of Enchantment must have auto insurance coverage that meets the state’s minimum coverage requirement.
Your proof of insurance must include property damage liability and bodily injury liability coverage. But the insurance laws in New Mexico don’t make you buy gap insurance—it’s considered optional motorist coverage.
How much gap insurance do I need in New Mexico?
How much gap insurance you should buy depends on several factors, including your vehicle’s purchase price, value, and loan amount. For example, if you owed $27,000 on a car valued at $20,000—and it was a total loss—you would need gap coverage for at least $7,000.
Remember that gap insurance covers the difference between what you owe and what the vehicle is worth. You won’t need any gap insurance if you paid cash for your car or if you’ve already paid off your car loan.
See More: How Much Car Insurance Do I Need?
How Gap Insurance Works in New Mexico
Consider this scenario: You are in an accident and your car is totaled. You still have a pretty significant balance on your auto loan, and your car isn’t worth as much as you owe.
Your full coverage, including collision insurance and comprehensive coverage, can cover the actual cash value. But what happens when your auto insurance policy isn’t enough to cover the full value?
Unfortunately, you’re responsible for repaying the total amount of the loan. This is why many New Mexico motorists buy gap insurance to cover the difference. It’s optional insurance coverage, but it can save you a lot of headaches and financial hardships.
For example, suppose you’re a homeowner in Albuquerque and own a four-year-old Honda Civic. It’s only worth about $13,000, but your loan balance is $16,200.
If the car is totaled (or stolen), your insurance coverage pays for the car’s value—leaving you to foot the bill for the $3,200 difference. Gap insurance would cover that remaining balance for you so that you don't have to pay out of pocket.
How Much Gap Insurance Costs in New Mexico
Gap insurance in New Mexico is more affordable than you might think. Policyholders pay an average of $206 per month for standard coverage with gap insurance.
Your cost will depend on several factors, including the underwriter at the lender or insurance company you choose. Keep in mind that you’ll usually pay more if you buy gap insurance from a dealership or financial institution. Buying from an auto insurance provider tends to be cheaper.
How to Buy Gap Insurance in New Mexico
When it comes to your car, you’re naturally going to want some peace of mind. Before you buy car insurance and gap coverage, consider the best way to purchase a policy.
Insurify makes buying gap insurance easy for New Mexico drivers. You can compare car insurance quotes and policies to find a great rate on gap insurance quickly—real-time quotes are available in less than five minutes.
Frequently Asked Questions: Gap Insurance in New Mexico
New Mexico has minimum requirements for car insurance coverage. State law doesn’t mandate gap insurance. However, gap insurance can be important financial protection, and it’s strongly recommended if you’re financing or leasing a car.
You don’t generally get money back from a gap insurance policy. But there are exceptions. For example, you may get a refund of the unused portion of your policy if you pay your gap premiums up front and pay off your car loan early.
New Mexico drivers who finance or lease a car, a truck, or another vehicle can find the best auto insurance rates on gap insurance using Insurify. It’s a comparison-shopping platform that simplifies the process of looking for car insurance coverage and helps you find affordable protection for your vehicles.
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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.