Gap Insurance in Kentucky | The bank rate

Gap insurance in Kentucky is worth knowing if you are financing the purchase of a new car. Indeed, like many types of insurance, it can help prevent financial difficulties. However, while it does offer financial protection to people who own a newer, funded car, not all companies offer it. If you’re looking for gap insurance in Kentucky, the best auto insurance companies that offer it will likely vary in cost as well.

What is gap insurance?

Gap insurance is an optional type of coverage that you can purchase to help cover the difference between the depreciated value of your car and the amount of its loan remaining, in the event that it has been deemed a total loss by your company. insurance.

Every car depreciates over time, but this is more important with newer or newer cars, which depreciate the most once they leave the field. If your car is destroyed or stolen, your insurance company will not pay you the exact amount you paid for it. The depreciated value paid by your insurer in this case may not be enough to satisfy the loan. Spread coverage is therefore a way to ensure that you don’t end up with an unpaid loan balance in the event that the vehicle is damaged beyond repair.

How Does Gap Insurance Work in Kentucky?

If you have a loan on your car, you may already be considering Kentucky gap insurance. However, gap insurance is not available for all cars financed in this state. To be able to purchase gap insurance in Kentucky, the car must:

  • Be under 2-3 years old
  • Have both comprehensive coverage and collision coverage
  • Not having had other loans / tenants

You must also purchase gap insurance with the car. If you are working through an insurance company to save money, you must purchase it before signing the loan and driving the car off the lot.

There is a common misconception that the only prerequisite for purchasing gap insurance is that the car has a loan, which is not the case in Kentucky, or often in other states as well. .

Another misconception about gap insurance is that it is basically the same as “replacing a new car”. While there are some similarities, this is not true either. Spread coverage will only pay off an auto loan balance after the actual cash surrender value of the insurance has been taken into account. It will not provide you with financial compensation for getting a new car. That said, it might be easier for you to get a new car loan in the future, as your debt-to-income ratio (DTI) would be lower if the other loan is already paid off.

When do you use gap insurance?

Gap insurance applies in situations where your vehicle is irreparably damaged and considered a total loss by your insurance company. To be considered a total loss, the repairs must be greater than the actual market value of the car. This means that a cracked windshield or damaged bumper will not be enough to activate blanket coverage. If the actual cash value of your vehicle is less than the loan amount, gap insurance would come into play.

Consider the following example:

A storm is going through your hometown and knocking down many trees, one of which lands on your car. Because you have comprehensive insurance, your insurance company is prepared to pay for any damage. An officer comes out and determines that your car is a total loss. After you factor in the deductible and depreciation, your insurance company pays $ 20,000, leaving about $ 7,000 still owed to your lender. Gap insurance would cover the remaining $ 7,000 in this example.

Gap insurance vs other coverages

Many types of auto insurance can help provide financial protection, and in this sense, gap coverage is similar. However, a key difference between Kentucky gap insurance and the other types is that you must have collision insurance and comprehensive insurance to be able to purchase it. In addition, the only event it protects you against is a total loss, and to be determined as a total loss, the damage or loss must be a collision or multi-peril covered event.

Finally, variance insurance only applies if there is a payment difference between the actual cash surrender value of your totaled vehicle and an outstanding balance on the loan. If you have paid off your loan to the point where there is no difference in value, gap insurance may not apply at all for total loss.

Here’s how gap insurance compares to all perils and collision coverage:

Gap insurance Full Collision
What it covers Pay the difference between the depreciated value of a car and the amount still owed to a lender. Activates only if the car is considered a total loss. Activates when your car is damaged during a collision-free event. Damage caused by inclement weather, falling objects, fire and theft are all covered risks. Activates when your car is damaged while moving. Collisions with other vehicles, fences, signs and trees are all covered risks.
Who offers it Can be purchased from some dealerships, but many insurance companies offer it as well.
Note: It is sometimes listed as loan / lease coverage.
Most companies offer full coverage. Most companies offer collision coverage.

Where to buy gap insurance in Kentucky?

You can purchase gap insurance from many dealerships at the time of purchase, but there is one important factor to consider: the dealer will most likely want to add the additional costs on top of your loan. In doing so, you will pay interest on the spread insurance and on the loan. The other downside to purchasing gap insurance from a dealership is that dealerships can charge more money for gap insurance than a regular insurance company, even without interest.

You can save more by purchasing gap insurance from an insurance company. Since not all Kentucky auto insurance companies offer gap insurance, you may need to ask around to determine availability and compare quotes. It’s not uncommon for insurance companies to call gap insurance “loan or rental coverage” instead of gap coverage, so keep that in mind while you research.

Gap Insurance Companies in Kentucky

All of the following insurance companies are also providers of gap insurance in Kentucky:

  • Travelers – Travelers offers a variety of insurance products, including spread coverage. Plus, if you own your home, you may be able to get discounts on multiple policies by using Travelers for your auto and home insurance needs.
  • Nationwide – Their gap insurance option can be purchased whether or not you have an auto insurance policy with them, which is a benefit for drivers who need gap insurance for a short period of time. time.
  • Progressive – Progressive offers a number of different hedging options (spread coverage being one of them). This is an auto insurance company that calls the gap coverage “loan / lease coverage”.
  • Allstate – Allstate sells spread coverage in addition to many other types of coverage. It also offers discounts for additional savings on your auto insurance policy, which could help you save overall.
  • Liberty Mutual – You’ll find spread coverage with Liberty Mutual as well as just about every other type of coverage option on the market. You must be the first owner of the car and this insurance must be taken out at the same time you buy your car.

Frequently Asked Questions

How much does gap insurance cost?

The cost of gap insurance varies with each person and with each car purchase. Depending on where you purchase gap insurance in Kentucky, the costs of the dealership and the auto insurance company can vary widely.

Is gap insurance mandatory in Kentucky?

No, gap insurance is not required by Kentucky state law. If you opt for gap insurance, you must do so at the time of vehicle purchase, and this requires having full and collision coverage (also required by most vehicle financiers).

Should you purchase gap insurance from the same company as your auto insurance?

No. You can purchase gap insurance from any company or dealer operating in your state that offers this coverage. It doesn’t have to be the same company that you also buy auto insurance from, but you might find that this is the simplest and most cost-effective option because gap insurance in Kentucky also requires full coverage and collision coverage on your policy.

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