New York drivers aren’t required to have gap insurance. But if your car is totaled, it will cover the gap between your insurance payout and loan balance.
, but if your car is stolen or totaled, you’ll be glad you did.
Your car must be less than 2-3 years old to be eligible for gap insurance in New York.
Drivers who opt for gap insurance in New York will be compensated if their car is totaled or stolen and the payout from the insurer doesn’t cover the remaining loan or lease balance.
You should consider gap insurance if your vehicle is financed—some dealerships or lenders may even require you to purchase it during the buying process.
Many New York car insurance companies provide gap insurance as an add-on to your
. Luckily, gap insurance can cover the difference.
Let’s say your $40,000 leased car is in an accident and your insurance provider deems it a complete write-off. Your comprehensive insurance plan provides you with only a $30,000 pay-out. But if you added a gap waiver to your policy, it would compensate you for the remaining $10,000 you owe to the lender.
Still not convinced that gap insurance is a good idea? Consider the following:
Within the first year of ownership, it’s not uncommon for vehicles to lose 20% of their value.
The car loan balance can surpass its actual cash value (ACV) in the first few years of ownership.
Most auto insurance policies will cover only your car’s ACV at the time you file your claim.
Gap insurance covers the difference between the insurance provider’s payout and the balance you still owe on the car.
In New York, you have the option to purchase gap insurance coverage if:
It’s better to buy gap coverage from an insurance company than a dealership
Gap insurance in New York can be purchased from insurance providers, dealerships, and auto loan lenders like banks and credit unions.
Dealerships are often the most expensive option, charging a flat rate of $400 to $700—not including interest.
In contrast, buying gap car insurance coverage from an insurance provider in New York is relatively inexpensive, but the prices of various coverage options can vary significantly. Which option you select will depend on your budget and personal driving needs.
: Progressive has a gap insurance option it calls “loan/lease payoff coverage” that provides up to 25% of your car’s value to pay off the remaining loan balance.
: Liberty Mutual’s gap insurance prices are on average a little higher than those of other vehicle insurance companies. Liberty stipulates that the gap insurance be bought at the same time as your car, and you be the car's first owner.
: Allstate’s gap insurance policy notes that they will cover your primary car insurance deductible to up to $1,000. This gap protection is available on vehicles financed for up to 4 years, as well as new and used cars.
: This insurance provider calls its gap insurance “loan/lease gap insurance,” and drivers must be the original owner of the vehicle. To qualify for a gap amount, cars must also be purchased from a new car dealer—not resale.
: The gap insurance option for State Farm is called “Payoff Protector,” and only State Farm auto loan coverage holders are eligible to add this benefit. It’s not considered an insurance product, but it covers the remainder of your State Farm loan if your vehicle is declared a total loss and your primary insurer has already paid its share.
and speak to a licensed insurance agent to find the best plan tailor-made for your budget.
FAQs
Do you need gap insurance in New York?
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Gap insurance isn't mandated by state law in New York, but if you’re financing your vehicle, your dealership or financial institution may require you to buy it. That said, it’s worth purchasing gap insurance even if you haven’t leased your vehicle to help with depreciation and physical damage costs.
What is the best cheap gap insurance for seniors in New York State?
, we found that AARP, Nationwide, and Travelers typically have the cheapest rates for mature drivers—and all of them offer relatively inexpensive gap insurance add-ons.
What is the downside to gap insurance in New York?
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The high cost of gap insurance at your dealership may give you a severe case of sticker shock, and some drivers may decide the price simply isn’t worth it. An auto insurance provider will usually give you a far better rate, so consider shopping around before you decide.
What’s the difference between gap insurance and new car replacement coverage?
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Gap insurance bridges the “gap” between what the insurance provider deems as a motor vehicle's actual cash value when the claim is filed and the owner’s remaining loan balance in the event of a total loss. New car replacement insurance, on the other hand, covers the entire cost (downpayment and all) of a new car of the same make and model—minus the deductible.
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