Gap insurance in Nevada

Nevada law doesn't require gap insurance, but you'll be glad you have it if your car gets totaled and leaves you with an outstanding loan.
Written by Jasmine Kanter
Edited by Sarah Gray
In
Nevada
, if your car is totaled and the insurance payout doesn’t completely cover your auto loan,
gap insurance
(or guaranteed asset protection insurance) will make up the difference. 
  • Nevada
    gap insurance is an optional
    type of coverage
    that can help close your auto loan or lease after a total loss.
  • According to Nevada law, gap insurance buyers have a 30-day "free-look period,” during which they can cancel their policy and receive a full refund.
  • Nevada auto insurance companies often offer gap insurance as an add-on to a full coverage car insurance policy.
  • Gap insurance doesn’t replace
    liability insurance
    and won’t cover either bodily injury or property damage.

How gap insurance works in Nevada

Gap insurance in Nevada covers the difference between the
actual cash value (ACV)
of your totaled vehicle and the amount you still owe on your car loan.
Gap insurance coverage allows you to move on quickly from a total loss. If you don't have it, you could be stuck paying hundreds or thousands of dollars to close an auto loan for a wrecked car!
Here’s how it works:
  1. You finance a vehicle and purchase gap insurance. The moment you drive your new vehicle off the lot is when it starts to depreciate, with most vehicles losing around 20% of their value within the first year.
  2. Your vehicle continues to depreciate. In the early years of ownership, the loan balance is often greater than the car's actual cash value on paper.
  3. Your vehicle gets wrecked. After a total loss accident, your insurance company will only reimburse you for the actual cash value of your vehicle at the time it was destroyed.
  4. You claim gap insurance. If the insurance payout isn’t enough to cover your loan, gap insurance steps in to close the difference.
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When do you need gap insurance?
You need gap insurance if the coverage limits of your standard auto insurance policy fall short of the vehicle’s total value. 
Gap insurance is usually a good idea if you:
  • Lease your vehicle
  • Finance your car for an extended period (five years or more)
  • Make a low down payment on your vehicle (less than 20%)
  • Drive a highly customized vehicle or a specific make or model that depreciates quickly
  • Rolled over negative equity from a previous vehicle into your current loan

Buying gap insurance in Nevada

Is gap insurance worth the money? If the answer is yes, here’s what you need to know:
  • All gap insurance buyers in Nevada are guaranteed a 30-day
    "free-look period"
    during which they can cancel their policy and receive a full refund.
  • Even after the free-look period has expired, buyers can still cancel coverage, but they will receive a prorated refund of their gap insurance costs.
  • Consider your vehicle’s make and model, its depreciation rate, the size of your loan, and the length of your loan when choosing coverage limits for your gap insurance policy. 
  • Gap insurance doesn’t cover repairs and it won’t pay the ACV of your car if it’s stolen. For that, you need
    collision coverage
    and
    comprehensive coverage
    .
The dealership or lender might offer gap insurance when you finance or lease a car.
While it’s convenient to buy coverage on the spot, it’s usually cheaper to get gap coverage directly from an insurer
. You might even
qualify for a discount
by adding it to your existing car insurance or homeowners policy!

Gap insurance companies in Nevada

In Nevada, you can find gap insurance for sale at most major car insurance companies and auto loan lenders, such as credit unions.
Here’s what the biggest insurance providers in the state have to say about their coverage:
  • Allstate
    recommends adding gap insurance if you made a small down payment, chose a long car loan term, or leased your vehicle.
  • Nationwide
    allows you to add cheap gap insurance as an additional coverage option to one of its standard auto insurance policies.
  • Progressive
    calls gap insurance “loan/lease payoff coverage” and limits the potential payout to 25% of your vehicle’s value.
  • State Farm
    offers “Payoff Protector” as an exclusive benefit for customers who take an auto loan with the company. It’s a financing product, not an insurance product, which could affect its exclusions and claim process.
  • USAA
    provides great rates to military members and their families, so if you’re already a customer, speak to an insurance agent about adding gap coverage.
While gap insurance rates have more accessibility than most other types of coverage, they can still be quite high, especially in big cities like
Las Vegas
, NV. Compare premiums from insurance companies, lenders, and dealerships to find the cheapest gap insurance.
Key Takeaway
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FAQs

Unlike liability coverage, the state of Nevada doesn’t mandate gap insurance and auto lenders can’t force you to buy it. However, if you’ve made a small down payment, taken out a long-term car loan, or bought a model that depreciates rapidly, gap insurance makes sense. 
Both gap insurance and
new car replacement coverage
make it easier to move on from a total loss accident and into a new vehicle. Where they differ is the situations in which they apply: the former steps in after a total loss accident, while the latter applies to your next vehicle purchase.
Gap insurance covers the difference between your vehicle’s actual cash value at the time it was wrecked and the remainder of your auto loan. New car replacement insurance, on the other hand, pays the difference between the purchase price of your previous car and the newest iteration of the same make and model, minus a deductible.
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