If your financed car gets totaled in an accident, you still have to pay off the car loan. Unfortunately, the standard payout may not cover the full amount you owe—many drivers owe more than the

ACV or actual cash value

of the car because of interest.

So what does gap insurance cover? Here’s a breakdown of how gap insurance works in Oklahoma:

You buy a car, and after a few months it’s worth a little less than you bought it for.

The amount you owe on your loan is higher than the vehicle’s value, thanks to interest.

You get into a crash and your financed vehicle is totaled.

Your standard payout covers the car’s market value, but you still owe more on the loan.

Gap insurance kicks in to cover the gap, so you don’t owe anything else to the lender.

Disclaimer: You must have

comprehensive coverage

to be eligible for gap insurance coverage. Gap coverage kicks in after a total loss, whereas warranties kick in for problems with major parts.

There are also some exclusions for older models and mileage. You may still be able to purchase gap coverage within the first year if you didn’t buy it at the time of purchase, but accessibility varies by company.

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

Here’s how to decide if you need gap insurance in Oklahoma

Not everyone can or should purchase gap coverage. Here are some factors to consider:

Loan agreement terms: A smaller down payment and longer loan term can make gap coverage more valuable. Higher value cars are at higher risk.

Projected depreciation: If you’ve financed a model with a

high depreciation rate

, gap coverage can help protect your bottom line in the event of a total loss.

Finally, you must consider the cost of coverage.

While it’s certainly easier to buy gap coverage from a dealership at the lot, insurance rates are usually more expensive. First-time buyers should know that the flat fee for gap coverage from a dealer can be $500 per year or more.

Most Oklahoma drivers will find

cheaper car insurance

and gap coverage from an insurance agency. It’s an add-on that usually costs about $50 per year.

While gap insurance is an optional coverage, it could save you a ton of money in the event of a total loss.

Learn more:

Should I get gap insurance from a dealer or insurance company?

Gap insurance companies in Oklahoma

Oklahoma drivers can either purchase gap coverage from insurance companies or auto loan lenders like a credit union or bank.

Check out a few of the most popular providers that offer gap insurance in the state of Oklahoma:

Travelers

: A longstanding provider of insurance, Travelers offers loan/lease gap coverage for new vehicles—and excellent customer service.

Liberty Mutual

: Alongside gap coverage, Liberty Mutual offers an excellent accident forgiveness program and a Better Car Replacement program.

Bristol West

: A sub-group of Farmers Insurance, Bristol West offers gap coverage in Oklahoma. Private car and commercial car drivers should look into this company.

USAA

: Only available if you finance your vehicle through USAA. Military members and their families can get very cheap gap coverage in Oklahoma with USAA.

State Farm

: Only available if you finance your vehicle through State Farm. Ask the insurance agent about the Payoff Protector program. While it’s not insurance, it will cover the balance of your loan if the car is declared a total loss—and their online banking system is easy to use.

This is not a conclusive list, so it’s wise to

shop around

and get free quotes before you commit to a vehicle loan. Rates vary from one company to the next, so you need to check with multiple companies to unlock cheap insurance.

Remember: Shopping around can help you find cheap rates.

Compare insurance quotes

from a few different gap insurance providers to ensure you’re not overpaying for coverage.

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FAQs

Do you need gap insurance in Oklahoma?

Gap insurance is not legally required by state law in Oklahoma. However, some lenders can require borrowers to carry gap coverage. Gap coverage can be valuable for Oklahoma drivers who have high balances, long loan terms, or models that depreciate quickly.

What’s the difference between gap insurance and new car replacement coverage?

Both combat depreciation and protect your bank account. Whereas gap insurance pays for the gap between the insurance payout and your remaining loan balance,

new car replacement

is a reimbursement for a brand-new car of the same make and model. You do have to pay the deductible, but then you’ll get a brand new car.

Are you overpaying for car insurance?

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