in Louisiana to fulfill a requirement, but you might want to look into it if you have a financed or leased vehicle. If your car were to be totaled or stolen while you have a substantial remaining balance to pay off, gap insurance will cover it.

Gap insurance isn’t only an item you can purchase from your insurance provider. You can also acquire it through a dealership where you financed or leased your vehicle—or the credit union or bank responsible for your

car loan

. The most inexpensive route is through your

car insurance

provider, but there’s one issue—not every company offers gap insurance.

MORE:

How to lower your Louisiana car insurance costs

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The best gap insurance companies in Louisiana

Luckily, you can buy gap insurance from some of the most popular insurance companies in the Bayou.

The General

Safeco

, and Clearcover all offer gap insurance to their customers.

However, if you happen to have car insurance through a national provider that doesn’t offer gap insurance, like

GEICO

, you might need to

switch insurance companies

Before committing to one provider, you should compare

quotes

from three to five different companies to ensure you’re making the best financial decision.

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How does gap insurance work in Louisiana?

Gap insurance, also known as “guaranteed asset protection,” looks similar in Louisiana to other states. A gap insurance policy will cover the difference between your outstanding lease or loan balance and your vehicle’s

actual cash value

when it’s totaled or stolen.

You will need both

collision coverage

and

comprehensive coverage

before you qualify for gap insurance. It’s possible to receive a reimbursement if you pay for gap insurance ahead of time or pay off your vehicle. You will not need gap insurance if you already own your vehicle outright.

If you happened to turn down gap insurance at the dealership where you financed or leased a vehicle, you can still add it to your policy in most cases. Although each company has slightly different criteria to qualify, here are the usual requirements:

You have a vehicle that’s less than three years old

There is no prior damage to your vehicle

You are the vehicle’s original owner

Your vehicle meets the insurer’s standards for mileage and value

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New car insurance: What coverage do you need when buying a new car?

What does gap insurance cover?

While there are many advantages to financing or leasing a vehicle to drive a brand-new car, there’s one downfall: depreciation. Your car will lose about 5% of its value the moment you put your keys into the ignition, and it loses around 20% of its value within the first year of ownership.

Since your loan terms typically won’t include a 20% down payment, you’ll run into a financial bind if something happens to your financed or leased car. That’s where gap insurance shines—it pays the “gap” between the insurance payout you receive and your outstanding loan balance when your car is considered a total loss. There are even situations where gap insurance will cover your

insurance deductible

Let’s talk numbers to get a better idea of how gap insurance swoops in to cover you. Picture this: you take out a $20,000 loan on a vehicle and fall victim to an accident on I-10 E on the way home. You still owe $20,000 on the car, but your insurance company determines the actual cash value of your car to be $17,000. Without gap insurance, you would have to pay the remaining $3,000 left on your loan balance.

With gap insurance, you wouldn’t have to foot the $3,000 bill left behind. You would just need to submit a claim to your insurance provider with the settlement from your collision claim to get the remaining loan payments covered or even waived.

You might have to pay for the

deductible

, however, so make sure to ask your insurance agent about the details of your coverage.

MORE:

When your car is totaled and you don’t have gap insurance

Average monthly cost of gap insurance in Louisiana

Similar to a standard insurance policy, factors like your vehicle type, state, and the actual cash value of your vehicle will affect how much you pay for gap insurance in Louisiana. The cheapest way to purchase gap insurance is through an insurance provider, which averages between $2 and $30 per month.

In contrast, getting gap insurance through a lender or dealership could cost you a lump sum between $200 and $700. Most customers opt for the small bump in their premium costs through an insurance provider since it’s more cost-effective.

MORE:

How to cancel gap insurance and get a refund

Is gap insurance worth it in Louisiana?

In some cases, lenders will require drivers to purchase gap insurance. Not everyone needs it in their back pocket, but it’s a beneficial add-on worth considering.

Here’s when gap insurance could serve you well:

Your

down payment

was less than 20% when you purchased your vehicle

Your loan term is longer than the

average loan term

(e.g. 72 or 84 months)

You purchased a

luxury car

or any vehicle that depreciates quickly

You’re a frequent driver and plan to put a lot of mileage on your vehicle

Ultimately, gap insurance is worth it when you buy it as an add-on to your existing policy through your provider. It’s worth the peace of mind to pay an extra few bucks per month, and it can Bayou time to sort your finances out after an unfortunate event.

“Amazing! I’ll admit, I’m young with 2 accidents. This spiked my insurance rates and every quote I found.
Jerry
, though, helped me find affordable insurance. It truly helped me!” —Marcus F.

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