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How To Save $500 On Gap Auto Insurance by Sam Streubel

The average price for gap auto insurance sold by a dealership or finance company is over $500.

Imagine you're in a car dealership and you've just purchased a brand new car. You're sitting there with a self-satisfied smile on your face that lets everybody in the showroom know you just brought the salesman to his knees with your finely honed negotiating skills.


Next you go see the finance person to place a loan. This is where you're casually informed that if you wreck your new car during the next year or two you're going to have fork over maybe five grand because the car will be worth that much less than what you still owe.  Lucky for you the finance guy has a tailored made solution to the problem. For a measly $578 one time fee you can purchase a gap policy that protects you from a potential shortfall, up to $5,000, if you owe the bank more than the car is worth when that bus hits you

Of course you're going to say ‘sure, go ahead' because you're afraid of losing your shirt and, by the way, did I tell you the premium could be rolled right into the loan? On one hand, you're relieved to know the value your asset is protected, but on the other hand you're asking yourself why it had to cost so much. Well, it doesn't. But who knew that there was even such a thing as gap insurance much less how much it's supposed to cost. The problem is not with you, but with the major insurance companies and their brokers.


The reason you don't hear anything about gap from your insurance agent is that it isn't exactly a big money maker. With an average gap endorsement costing around $35 a year, there isn't a lot of profit incentive to buy 30 second spots on American Idol. Besides the price, there's another difference between the gap insurance sold by a car dealer and the policy rider sold by a name brand gap insurance provider. When you buy gap from a major insurer you can cancel the rider as soon as the loan balance and value of your car reach parity ‘ usually within the first two years of ownership.

With dealership gap insurance, the coverage is spread out over 60 months and cannot be canceled for a refund ‘ whether you need it or not.

Now that you've learned how to save $500 on gap auto insurance, pass it on.

About The Author-Sam
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