Does Allstate Offer Gap Insurance? Here is What You Need to Know

Does Allstate Offer Gap Insurance?

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If you owe more than your car’s value and it gets totaled or stolen, you need gap insurance. Allstate has a gap insurance product that covers the difference. Read this article to see if it’s right for you/PHOTO: Files

Gap insurance is a type of coverage that helps you pay off your car loan or lease if your vehicle is totalled or stolen and you owe more than its depreciated value.

It can save you from paying out of pocket for the difference between your insurance settlement and your loan balance.

But does Allstate offer gap insurance? And if so, how does it work and how much does it cost?

What Is Gap Insurance and How Does It Work?

Gap insurance stands for guaranteed asset protection.

It is an optional coverage that you can add to your car insurance policy if you are financing or leasing a new or used vehicle.

Gap insurance works by covering the gap between the actual cash value (ACV) of your car and the amount you still owe on your loan or lease.

The ACV is the market value of your car at the time of a total loss, which is usually lower than the original purchase price due to depreciation.

For example, suppose you bought a new car for $30,000 and financed it with a $25,000 loan.

A year later, your car is stolen and your insurance company pays you the ACV of $20,000.

However, you still owe $22,000 on your loan.

Without gap insurance, you would have to pay the remaining $2,000 out of your pocket but with gap insurance, your insurer would pay the $2,000 gap for you.

Does Allstate Offer Gap Insurance?

Yes, Allstate offers gap insurance for approximately $20 per six-month policy.

Allstate gap insurance pays the difference between a total car’s value and the policyholder’s loan or lease balance, including the collision or comprehensive deductible up to $1,000.

It is available on new and used cars, but it must be added at the time of vehicle financing.

Allstate gap insurance covers up to $50,000 of your balance if you experience a total loss.

However, Allstate gap insurance does not cover negative equity.

This is when you roll over the balance of your previous loan into your new loan.

What Are the Benefits of Allstate Gap Insurance?

Allstate gap insurance can offer several benefits to drivers who finance or lease their vehicles, such as:

  1. Peace of mind: You don’t have to worry about paying a large amount of money if your car is totalled or stolen and you owe more than it’s worth.
  2. Savings: You can save money on interest and fees by paying off your loan or lease faster.
  3. Protection: You can protect your credit score and avoid defaulting on your loan or lease.
  4. Rewards: You can earn loyalty rewards, cashback, discounts, vouchers, or free services from Allstate’s affinity partners.

What Are the Drawbacks of Allstate Gap Insurance?

Allstate gap insurance can also have some drawbacks that you should be aware of, such as:

  1. Limited choice: You may not be able to compare prices, features, or quality of other gap insurance products in the market, as Allstate gap insurance is only available through Allstate agents or dealers.
  2. Conflicts of interest: Your dealer or agent may have a financial incentive to sell you gap insurance, regardless of whether it is suitable or beneficial for you.
  3. Lack of regulation: Gap insurance may not be subject to the same regulation, oversight, or protection as standard car insurance policies, as it may fall under a different legal or contractual framework. This may make it harder for you to file a complaint, claim, or dispute if you have a problem with the gap insurance product or provider.

Conclusion

Gap insurance is a type of coverage that helps you pay off your car loan or lease if your vehicle is totalled or stolen and you owe more than its depreciated value.

Allstate offers gap insurance for approximately $20 per six-month policy.

This covers the difference between your car’s value and your loan or lease balance, including your deductible up to $1,000.

Allstate gap insurance can be a great option for you, but only if it meets your needs and expectations.

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