Allied Insurance offers gap insurance coverage to policyholders as long as they are the original owners of their vehicle and their vehicle is less than two years old. Gap insurance, or Guaranteed Asset Protection insurance, will pay the difference between your car’s actual cash value and the balance on your remaining loan if your vehicle is totaled or stolen.

Adding gap coverage to your

auto insurance

policy can be a great way to protect yourself from undue financial burden should your new vehicle be wrecked or stolen—but what is it exactly? We’ll go over how gap insurance works with Allied Insurance, where you should get this coverage from, and more here.

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Does Allied offer gap insurance?

Allied Insurance does offer gap insurance, as long as you meet their qualifications.

But let’s back it up to define what gap insurance actually is.

Gap insurance

, or Guaranteed Asset Protection insurance, compensates for the natural depreciation of your leased or financed vehicle if it were to be stolen or totaled.

If you have collision or comprehensive insurance only, the payout for a totaling event like that would only cover the

actual cash value (ACV)

of your vehicle rather than what it was worth when you signed onto your loan or lease. This can leave you with a sizeable sum to cover if you are

upside down on your car loan

—meaning you owe more on your loan or lease than the vehicle’s ACV.

Gap insurance fills in the difference between the current ACV and the amount still owed through financing.

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How does gap insurance work with Allied?

Allied Insurance is part of the

Nationwide

Family of Companies, so many of their coverage details are similar to that parent company. But when it comes to gap insurance, Allied has two stipulations one must meet to qualify for this coverage:

You must be the original owner of the vehicle you’re trying to cover

The vehicle must be less than two model years old

If you meet those qualifications, you can add gap insurance to a full coverage insurance policy—meaning, you should have at least

collision coverage

and

comprehensive coverage

too.

You can file a gap insurance claim with Allied if your new financed vehicle is totaled or stolen without recovery to cover the loan balance remaining after your other insurance takes care of the ACV. For example, let’s say you have $15,000 remaining on your car loan when it gets totaled. Your

insurance company values your totaled car

at $10,000 actual cash value. That leaves $5,000 of your loan balance that you now have to cover unless you have gap insurance.

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Gap insurance vs. loan/lease payoff coverage

Some insurance companies offer a type of coverage similar to gap insurance called loan/lease payoff coverage. The idea is the same as gap insurance, but this coverage only pays out up to 25% of your vehicle’s value, which could leave you to cover any remaining costs. Allied Insurance does not offer this type of coverage.

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Is it better to buy gap insurance from the dealership or your insurance company?

It depends on whether you’re looking for the cheaper option or the easier option. For easy, you may prefer to go through your car dealership. Usually, car dealerships can tack on gap insurance directly to your financing agreement. You may even find that gap coverage is automatically included with your loan or lease unless you tell the dealership specifically that you do not want it.

However, buying gap insurance through the dealership or another lending agency like a bank or credit union is usually the more expensive option. Including gap coverage directly to your loan balance means you’ll be paying interest on that added expense since it’ll be bundled in with the rest of your loan.

Going through your car insurance company for gap coverage, however, will usually only add a small monthly charge to your expenses that totals between $20 and $40 per year.

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How do I know if I have gap insurance?

Is gap insurance worth it?

Gap insurance is typically a solid investment for anyone financing or leasing a new car. This coverage offers protection for you and your wallet if your vehicle is totaled in a wreck or stolen without recovery—already quite stressful situations that don’t need to be made worse by unnecessary costs.

And since loans and their interest rates are currently in a high-cost, long-term-period state, you’re likely paying more on your loan than the ACV of your vehicle. The more financial protection you have going into your financing agreement, the better.

In some cases, gap insurance is required. While not required by law, some lenders will require that you add gap coverage to your full coverage car insurance suite before you can sign off on your financing option. Be sure to thoroughly check and understand the terms of your lease!

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How to find the best gap insurance

Gap insurance isn’t available with every insurance company, so you’ll want to start by identifying the companies that do offer it. Allied is one of them, but

Progressive

Liberty Mutual

, and

Travelers

are all options too.

To find the best gap insurance, gather quotes from three to five different insurers to compare them to your budget and select the best policy for your needs.

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