Evertything you need to know about GAP Insurance in Texas

Are you looking for companies that offer auto gap insurance in Texas? GAP insurance is available in most states; however not all. CT, LA, NH, NY, VA, VT, and WA do not allow vehicle owners to carry this type of coverage.

Texas doesn’t require gap insurance. In fact, Texas prohibits the use of a gap waiver as a condition for a car loan or lease. A gap insurance policy is a valuable option for drivers who have new cars. It can cover you in the event that your car is stolen or totaled.

Your gap waiver would cover the remaining payments on your car lease or loan that exceed your car’s actual cash value or what you would receive in an accident. We recommend that you familiarize yourself with Texas’ consumer protection laws as well as the companies allowed to provide coverage in Texas if you are looking for gap insurance.

What is GAP Insurance?

If your vehicle is lost completely due to theft or damage, Gap Insurance, which Guarantees Auto Protection, will cover the remaining balance of your vehicle loan or vehicle lease.

Your full coverage insurance plan will pay you a payout equal to the actual cash value of your car if it was involved in a vehicle accident or theft. Gap insurance covers the amount you owe on your loan. This coverage can be very beneficial. After all, who wants to buy a car they don’t own? To purchase gap insurance, you must be the original loan or leaseholder.

There are exclusions that may affect your claim payout. These exclusions are standard according to the Texas Department of Insurance.

  • Late payments are possible
  • For warranty and other finance charges, you owe money
  • A deductible is required for insurance.
  • Your vehicle sustained permanent damage in an accident.

What is gap insurance in Texas?

In Texas, gap insurance, also known as a debt cancellation agreement or gap waiver, works just like in other states. The car’s value decreases quickly when you lease or buy a new one. This means that the amount you owe on it is often higher than the value.

The amount you receive from your insurer if your car is totaled or stolen would be equal to the vehicle’s cash value at the time. Gap insurance covers what you owe to the car and the actual cash value of the vehicle. This means you don’t have the obligation to pay for a vehicle that you no longer own. Although it can be very valuable for a new vehicle, it is generally not worth the cost if it is older or used.

What is the best place to buy Texas gap insurance?

Gap insurance can be purchased in Texas through an insurance company, or as a standalone policy through your dealer. We recommend getting quotes from your insurance company before you purchase gap insurance in Texas. Not all insurers are licensed to offer this type of insurance. Coverage directly from insurers is often less-expensive–often around several dollars per month–particularly if the coverage is added to an existing policy. Make sure that the gap waiver covers all types of loss such as:

  • Theft
  • All accidents
  • Floods and other natural catastrophes

We recommend comparing rates with auto insurance companies if you are considering purchasing standalone gap insurance from an auto dealership in Texas. A dealership can charge you between $500 and $1,000 for gap insurance. This could mean that you might spend more depending on their rates. The maximum dealer can charge for gap insurance is 5% on the loan amount, so coverage costs for a $30,000 vehicle can run up to $1,500.

Texas vehicle owners who have lost their vehicle can get help from gap insurance to cover the balance of their loan or lease. Gap insurance can also be known as a gap waiver or a debt cancellation agreement. The vehicle’s value will steadily drop after you buy or lease a new vehicle. The vehicle’s value will decrease disproportionately over the first few years. You will typically end up owing more on your loan or lease than the vehicle’s actual value.

What is the best place to buy Texas gap insurance?

Gap insurance can be purchased in Texas through an insurance company, or as a standalone policy through your dealer. We recommend getting quotes from your insurance company before you purchase gap insurance in Texas. Not all insurers are licensed to offer this type of insurance. Coverage directly from insurers is often less-expensive–often around several dollars per month–particularly if the coverage is added to an existing policy. Make sure that the gap waiver covers all types of loss such as:

  • Theft
  • All accidents
  • Floods and other natural catastrophes

We recommend comparing rates with auto insurance companies if you are considering purchasing standalone gap insurance from an auto dealership in Texas. A dealership can charge you between $500 and $1,000 for gap insurance. This could mean that you might spend more depending on their rates. The maximum dealer can charge for gap insurance is 5% on the loan amount, so coverage costs for a $30,000 vehicle can run up to $1,500.

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Texas list of gap insurance companies

Gap Insurance
Companies offer auto gap insurance in Austin

These insurance companies are currently licensed to offer Texas gap insurance coverage:

  • American Modern Home Insurance Co.
  • American National Property and Casualty Co.
  • American Security Insurance Co.
  • Arch Insurance Co.
  • Balboa Insurance Co.
  • Continental Casualty Co.
  • Courtesy Insurance Co.
  • Financial American Property and Casualty Insurance Co.
  • First Colonial Insurance Co.
  • Great American Insurance Co.
  • Great American Insurance Company of New York
  • Ironshore Indemnity Inc.
  • Landcar Casualty Co.
  • Lyndon Property Insurance Co.
  • Markel Insurance Co.
  • MIC Property and Casualty Insurance Corp.
  • Ohio Indemnity Co.
  • Old Republic Insurance Co.
  • Old United Casualty Co.
  • Republic Lloyds
  • Securian Casualty Co.
  • Sentruity Casualty Co.
  • Lloyds Insurance Co.
  • Spinnaker Insurance Co.
  • State National Insurance Co.
  • Transamerica Casualty Insurance Co.
  • United Financial Casualty Co.
  • Universal Underwriters Insurance Co.
  • Virginia Surety Co.
  • Wesco Insurance Co.
  • Work First Casualty Co.

Texas gap insurance laws

Texas does not require gap insurance. It is also not required to be purchased as a condition for obtaining an auto loan or lease. If you decide to buy a gap waiver, Texas law caps the cost of coverage at 5% of the loan amount. This assumes that you bought the car per the retail installment agreement.

A gap waiver is only available for lease cars. It can cost as little as 5% of your adjusted capitalized cost. After you purchase the gap waiver, you have 30 days to cancel it and get a full refund.

You should carefully read the terms of any gap waiver agreement you have received and ensure that they contain the following information required by Texas law.

  • The total cost of the debt cancellation arrangement
  • The term (how many years or months)
  • How to file a claim. The phone number and address of the insurer.
  • The time it takes to file a claim and for the loss to be considered.
  • How an insurer will calculate a claim settlement for a total loss
  • How the insurer will calculate the refund for your gap waiver if you cancel the policy
  • If you wish to cancel your debt cancellation contract, here are the steps to take

You will need to file a claim with either the administrator of the company or the company that issued your gap insurance policy if your car is stolen or damaged. Texas law may require that you provide the following information before a claim can be paid.

  • A debt cancellation request form
  • If the other person was at fault, evidence of the loss or damage and details of any payments received from your insurance or another party
  • Verification of your insurance policy deductible if the damage fell within your collision or comprehensive insurance coverage
  • If a police report was filed, a copy of it.
  • You may need a copy of the damage estimate for the car.

Your gap insurance company will issue a settlement amount to you based on the remaining installments of your loan if your claim is accepted. A Texas gap insurance provider may deny a claim for a few reasons.

  • The total loss was caused by the driver’s grossly negligent or illegal act.
  • The vehicle sustained damage during a race or speed competition.
  • The car was either “lost” by a legal authority or received damages after being repossessed.
  • If your car was damaged while driving in Mexico, coverage may not be available.
  • The car suffered damage from mechanical breakdown, freezing or normal wear and tear.
  • The primary purpose of the car was commercial (e.g. making deliveries). This would require commercial auto insurance.

You will receive a pro-rata refund for any premium you have not used if you cancel your gap coverage. If your initial term of coverage was 36-months and you paid upfront, but you cancel your policy within 18 months, 50% of your payment would be returned.

Best 5 Gap Insurance Companies in Texas (United States)

Not all companies offer gap insurance and the companies that do offer it may not offer it nationwide. Here are the best insurance companies in America for gap insurance:

1. Progressive

Progressive is the third-largest car insurance company in the United States. The company offers gap insurance in Texas, although it’s sometimes advertised as “loan/lease payoff insurance”.

Drivers can easily add gap insurance to their collision and comprehensive coverage. Progressive’s gap insurance is limited to 125% of your vehicle’s actual cash value. It may or may not cover your deductible, depending on your claim.

Overall, Progressive’s gap insurance minimizes the ‘gap’ between the actual cash value of your vehicle and the amount owing on that vehicle.

2. Allstate

Allstate offers gap insurance in most states, including gap insurance in Austin, Texas. Also known as guaranteed asset protection insurance, Allstate’s gap (or ‘GAP’) insurance is available for vehicles worth up to $100,000, although covered losses are limited to $50,000. That’s a higher amount than many of Allstate’s competitors.

Allstate’s gap insurance covers deductibles up to $1,000 as well, which can reduce your out-of-pocket expenses in the event of a total loss. If you crash a newer vehicle, then you might receive close to the full value of that vehicle in compensation without paying the deductible.

You can buy Allstate’s guaranteed asset protection insurance from dealers nationwide.

3. American Family

American Family offers gap insurance to customers in 19 states, including auto gap insurance in Austin, Texas. As with other American Family insurance products, American Family gap insurance can be purchased through independent agents.

To qualify for American Family gap insurance, you first need to have an auto insurance policy with American Family. That policy needs to have collision and comprehensive coverage.

4. Amica

Amica has been ranked as one of the best car insurance companies in America in recent years. In fact, the company recently took home the top spot in the J.D. Power rankings, which analyzes data from car insurance customers across the United States. Specifically, Amica received the highest rating in J.D. Power’s 2019 customer satisfaction report for the New England region.

Amica has strong customer service, claims satisfaction, and financial stability ratings. The company is also one of America’s few major providers to offer auto gap insurance in Austin, Texas.

Amica’s gap insurance works like the gap insurance offered by other companies here, covering the difference between the value of your vehicle and the amount you owe on that vehicle.

5. Nationwide

Nationwide is another major insurance provider that offers gap insurance. Gap insurance is an optional add-on available on certain vehicles. And, of course Nationwide provide auto gap insurance in Austin, Texas.

Nationwide’s gap insurance can cover deductibles, theft, total loss, and negative equity. Like other gap insurance policies listed here, Nationwide’s gap insurance adds more protection to your car insurance.

Frequently Asked Questions

How much is gap insurance?

GAP insurance is obtained to provide coverage between jobs. You leave one job for another but you have no health insurance coverage available for the first 90 or 120 days. You would obtain a quote for insurance, say you need 90-day coverage, then usually required to pay in full in advance. The cost depends on several factors: Who is seeking the coverage? How old? What gender? For what term: 30–60–90–120 days. Level of coverage desired; high pmts, less deductible, or high deductible smaller coverage. The best way to locate gap insurance providers is with an internet search.

Gap insurance provided by a licensed insurance agent is usually about $10/month on your auto insurance policy. It is only needed for 3–3½ years. So $360–400 is what that will cost.

Back to the dealer, I have had clients tell them my price and they will cut it down to $250–300 as that is still profit to them.

However, with the insurance company gap, the insurer pays off the vehicle altogether, from the date of loss. A dealer plan, after the insurer eventually pays their portion of the payoff, then you can go to the dealer and apply for their protection plan, they will investigate and dead their feet in paying… with this plan you must continue making your loan payments until the dealer plan pays off the loan.

Who Should NOT Buy GAP Insurance?

Buyers who already have monthly payments laid out and are onto of making sure that they will not be making payments for a long period of time. If this is your case then GAP insurance may not be worth buying. The cost of GAP insurance may be too high for the short period you will be making payments.

Do I have gap insurance?

How do you find out if you have gap insurance?

  1. Look at your auto policy. However, in most cases these things are so complicated you need to be an agent to be able to read them.
  2. Call your insurance agent and ask them what coverage you have. They will be able to tell you if you have coverage. More importantly, they will be able to tell you if you need it.

The purpose of gap insurance is to cover the difference between the covered amount on the policy (which amounts to the money you would get – minus deductible – if the car was totaled) and the actual cost to pay off the loan or lease on the vehicle.

Once the car is a few years old, and you’ve been paying on it, the actual total owed on the vehicle loan will be less than what the car would be worth on the market, which is what your insurance covers you for. If that’s the case, you no longer need “gap” insurance as there is no gap to cover.

Your insurance agent is the best one to tell you if you still need it, or if you don’t have it and you need it, how to get it.

You do NOT want to buy or lease a new car without it, otherwise, you could easily be in a position where you owe thousands more than your insurance would cover.

How long do I need gap insurance?

You can cancel the policy if you owe less on your vehicle than it is worth. This process usually takes around two years. Online car value guides can help you compare how much you owe.

You can cancel your policy if you sell your vehicle or pay off the loan early.

How to question a claim amount

Talk to your company if you aren’t sure if your gap insurance pays enough to cover a claim.

You can request an appraisal if you are still unhappy. Appraisers will be paid for by you and your company during the appraisal process. For any deadlines that may be required to order appraisal, check your policy.

Where Can I Get Gap Insurance Texas Coverage?

A dealer or insurance provider should be able to provide Texas gap insurance coverage. Although some insurance companies do not offer gap insurance, most do. WalletHub recommends that you get a quote from an existing insurance company first. It is cheaper to buy insurance directly from an insurance company, which averages $7 per month as add-on coverage.

These are some of the Texas insurance companies that offer gap insurance:

  • American Modern Home Insurance Co.
  • American National Property and Casualty Co.
  • American Security Insurance Co.
  • Arch Insurance Co.
  • Balboa Insurance Co.
  • Continental Casualty Co.
  • Courtesy Insurance Co.
  • Financial American Property and Casualty Insurance Co.
  • First Colonial Insurance Co.
  • Great American Insurance Company of New York
  • Ironshore Indemnity Inc.
  • Landcar Casualty Co.
  • Lyndon Property Insurance Co.
  • Markel Insurance Co.
  • MIC Property and Casualty Insurance Corp.
  • Ohio Indemnity Co.
  • Old Republic Insurance Co.
  • Old United Casualty Co.
  • Republic Lloyds
  • Securian Casualty Co.
  • Sentruity Casualty Co.
  • Lloyds Insurance Co.
  • Spinnaker Insurance Co.
  • State National Insurance Co.
  • Transamerica Casualty Insurance Co.
  • United Financial Casualty Co.
  • Universal Underwriters Insurance Co.
  • Virginia Surety Co.
  • Wesco Insurance Co.
  • Work First Casualty Co.

ValuePenguin suggests comparing rates offered by auto dealers with those offered by auto insurance companies to get the best price. Examine each policy and make sure you have the following information:

  • It is important to understand the term or length of the policy.
  • It is important to know how to file claims, find the address and phone number of your insurance provider.
  • It is important to understand the total cost associated with the agreement.
  • It is important to understand the time it takes for the total loss to be recouped and the deadline you will need when filing a claim.
  • It is important to understand how your insurance company calculates your insurance coverage after you cancel.
  • You should be able to cancel your policy.
  • It is important to find out the plans of your insurer for settling a claim.

Verify that you are covered for all types of loss, including theft, weather, flooding, and natural catastrophes.

References:

How does gap insurance work in Texas?

What Is Gap Insurance And How Does It Work?

GAP Coverage

Do I need gap insurance for my new car?

Gap Insurance Texas

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