is an optional coverage available to Utah drivers that will pay off any difference between their vehicle’s actual cash value and their outstanding

car loan

It tends to be more expensive for Utah drivers to purchase their gap insurance through a dealership or bank. For some, the convenience is worth the price. However, buying directly through your insurance provider is more affordable—but it may be tougher to find.

So between price and choice, it’s easy to get lost in the Utah mountains when shopping for gap insurance. Let us be your guide. Here’s everything you need to know about gap insurance and where to buy it in the beautiful state of Utah.

MORE:

How to lower your Utah car insurance costs

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The best gap insurance companies in Utah

To find the best deal on gap insurance in Utah, we recommend comparing quotes from three to five car insurance companies before buying.

You may have to

switch insurance companies

if you really need it for your financed vehicle.

Don’t know if you need gap insurance? Follow along—we did promise to be your guide!

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How does gap insurance work in Utah?

Gap insurance stands for guaranteed asset protection. It works the same way in Utah as in any other state: covers the difference between your car’s

actual cash value

and your outstanding loan balance (assuming you have negative equity—more on this next).

However, it’s worth noting that you can only add gap coverage to an insurance policy that already has

collision coverage

and

comprehensive coverage

. To clarify, these two coverages pay out the actual cash value after a total-loss car accident, while gap coverage pays off your remaining loan balance.

Along with policy requirements, your vehicle also has to qualify for gap insurance. Here’s what car insurance companies typically look for:

The vehicle is less than three years old

The vehicle has no preexisting damage

You are the first owner of the vehicle (some companies allow second-hand vehicles)

The vehicle falls within the insurer’s value and mileage restrictions

MORE:

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

What does gap insurance cover?

Like it or not, a new vehicle loses 20 to 30% of its value to depreciation in the first twelve months of ownership. So unless you put down a sizeable down payment or are making above-minimum monthly payments, there’s a good chance you’ll have negative equity during the early stages of your car loan.

Negative equity means your outstanding loan is greater than the actual cash value of your vehicle after depreciation. Without gap insurance, you will be required to continue paying on a loan for a totaled car—which sucks! Let’s give you an example.

Example: You take out a $35,000 loan to purchase a new SUV. You choose to protect it with a

full-coverage policy

(collision and comprehensive) but decline to add gap insurance. Unfortunately, you end up in an accident that causes your vehicle to be a total loss. After considering depreciation, your insurance provider only values your SUV to be $28,000. Your loan balance is still at $32,000—which means you still owe your lender $4,000.

Outcome: Your full coverage policy will pay out the $28,000. But without gap insurance, you’re on your own to pay the $4,000 out of pocket. Conversely, gap insurance would have covered the $4,000 if you had chosen to add it to your full-coverage policy.

MORE:

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

Average monthly cost of gap insurance in Utah

To add gap insurance to an existing car insurance policy, expect to pay between $2 and $30 per month. That may seem like a broad range, but your exact price will depend on your vehicle type, Utah zip code, driving history, and more.

However, regardless of where you fall in that price range, it will feel like a steal compared to getting gap insurance from a dealer or lender. They are known to be closer to the $30 to $50 per-month territory. That being said, they make it easy to bundle right into your paperwork.

Important Disclaimer: Don’t forget to drop gap insurance from your policy once the actual cash value of your vehicle is greater than the loan amount.

MORE:

How to cancel gap insurance and get a refund

Is gap insurance worth it in Utah?

Gap insurance is not required under

Utah’s minimum car insurance laws

. It is entirely optional. But it's worth the price in many situations. For instance, you:

Made a small

down payment

on your new vehicle (less than 20%)

Bought a car with a naturally high depreciation rate (a

BMW

or another

luxury car

)

You drive a lot, increasing the depreciation rate (over 15,000 miles per year)

Have a longer than

average loan term

(72 or 84 months)

Rolled over negative equity from a previous car loan

“Because I have a luxury car, I was more interested in finding better coverage than the exact price.
Jerry
helped me upgrade my policy, and when my record is cleared next year, I will be using Jerry again to choose an even cheaper plan!” —Paige W.

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