How does gap insurance work after a car is stolen? (2024)
Knowing how gap insurance works after a car is stolen is critical. Gap insurance may cover vehicle theft by paying the difference between your loan and the car's market value. Consider this coverage if your down payment is below 20%. We'll explain the relationship between gap insurance and stolen cars below.
Free Car Insurance Comparison
Compare Quotes From Top Companies and Save
Secured with SHA-256 Encryption
Ty Stewart
Licensed Insurance Agent
Ty Stewart is the founder and CEO of SimpleLifeInsure.com. He started researching and studying about insurance when he got his first policy for his own family. He has been featured as an insurance expert speaker at agent conventions and in top publications. As an independent licensed insurance agent, he has helped clients nationwide to secure affordable coverage while making the process simpl...
Licensed Insurance Agent
UPDATED: Feb 15, 2024
It’s all about you. We want to help you make the right coverage choices.
Advertiser Disclosure: We strive to help you make confident auto insurance decisions. Comparison shopping should be easy. We are not affiliated with any one auto insurance provider and cannot guarantee quotes from any single provider. Our partnerships don’t influence our content. Our opinions are our own. To compare quotes from many different companies please enter your ZIP code on this page to use the free quote tool. The more quotes you compare, the more chances to save.
Editorial Guidelines: We are a free online resource for anyone interested in learning more about auto insurance. Our goal is to be an objective, third-party resource for everything auto insurance related. We update our site regularly, and all content is reviewed by auto insurance experts.
UPDATED: Feb 15, 2024
It’s all about you. We want to help you make the right coverage choices.
Advertiser Disclosure: We strive to help you make confident auto insurance decisions. Comparison shopping should be easy. We are not affiliated with any one auto insurance provider and cannot guarantee quotes from any single provider. Our partnerships don’t influence our content. Our opinions are our own. To compare quotes from many different companies please enter your ZIP code on this page to use the free quote tool. The more quotes you compare, the more chances to save.
On This Page
- Gap insurance helps pay your auto loan balance if your car is stolen
- Report theft immediately to police and insurers to begin the claim process
- Comprehensive coverage can also cover you after a stolen vehicle
You may be wondering how gap insurance works after your car gets stolen. If you have gap insurance on a stolen car, some insurers will cover you if you carry comprehensive auto insurance coverage.
Read More: Does auto insurance pay if my car is stolen?
This article gives you information about protecting yourself financially, what steps to take if your car is stolen, and how gap insurance can help. You’ll also learn about additional insurance options you should consider and the importance of adequately reporting your claim.
Gap Insurance May Cover You if Your Car Is Stolen
Most gap insurance will provide coverage for losses from theft if all requirements are met. You will usually have to submit a police report to the insurer.
Your insurer will have to review the facts related to the theft and determine whether the vehicle is a total loss. You can incur a total loss if no one ever finds the car after the robbery is reported. Your insurer may specify a duration of time that has to pass before the vehicle can be declared as missing forever.
A total loss can also be declared if the vehicle is found, but significant damage was done to it before being left behind by the thief.
Read More: Does auto insurance cover theft?
You can determine the amount you may receive from your insurer using this totaled car value calculator. The insurance company may take some time to process your claim. Any separate gap insurance will probably not get settled until your car insurer has made a final decision.
When You Need Comprehensive Coverage
So, does auto insurance cover stolen vehicles? Comprehensive coverage pays for the market value of your vehicle in the event of a theft. Gap insurance only covers the difference between the market value and the amount you owe on the loan agreement.
Your gap insurance company may or may not require you to have comprehensive coverage on your vehicle. If you don’t have comprehensive coverage, you can be left to pay a significant portion of your auto loan without help from your insurance company.
In addition to theft losses, comprehensive coverage also pays you for damages that are not the result of a collision with other automobiles, such as the following:
- Damage caused by weather
- Fire damage
- Destruction from vandalism
- Incidents involving animals
You may have only signed up for the state-required liability policy to try to save money. But you can always review your policy and add comprehensive coverage at any time to avoid leaving a sizable outstanding auto loan balance.
Free Auto Insurance Comparison
Enter your ZIP code below to view companies that have cheap auto insurance rates.
Secured with SHA-256 Encryption
How Gap Insurance Works
Gap insurance works by paying a car owner the difference between the vehicle’s market value and any amount owed on a car loan. In addition, gap insurance is available for used vehicles and newer ones. Read more to see whether you should get gap insurance for a used car.
Most vehicles depreciate significantly and almost immediately after they're purchased. If you buy a new car and take out a loan to fund the purchase, the car will be worth less than the amount of your loan by the time you drive the car home from the dealership.Michelle Robbins Licensed Insurance Agent
Depreciation is important to understand because most car insurance policies pay you for the vehicle’s market value if the car is totaled or otherwise lost. This can cause a gap in the amount you receive from the insurer on your claim and the amount you owe to the lender.
Most people cannot afford to continue to make car payments on a vehicle that they cannot use. Gap insurance pays the difference, so you do not have to.
Gap insurance is a smart purchase if you did any of the following when buying your car:
- You put less than 20% down
- You rolled over a previous loan balance into a new purchase
- You leased a vehicle
- You have a car that loses value more quickly than other models
It is also worth considering gap insurance if your auto loan term is 60 months or more.
When you purchase your car, the car dealer will likely offer gap insurance with your financing package. You can also contact your car insurance company to add gap coverage to your policy.
Under a car lease arrangement, the company financing the lease will also offer gap insurance. You will likely have the option to add the cost to your monthly payment.
How the Insurer Protects Against False Claims of Theft
Insurance companies have determined that fraudulent claims for theft are filed at a higher rate than for other types of claims. Most companies have a thorough process to handle a theft claim.
The insurer will conduct an extensive investigation of any reported theft to verify that it is not fraudulent. This process can take some time and may cause you to wait on any payout. Read here to find out how long an auto insurance claim can be open.
You should know that any investigation is standard, and you should try to facilitate the process by giving all requested information as quickly as possible.
What You Should Do if Your Car Is Stolen
If you find your car missing, you may not know what to do. The first thing you should do is contact the police and file a report. Make sure to get a copy of the police report.
Next, you will need to notify your auto insurance company of the theft. You can inquire about the process for filing a claim for a payout if you have comprehensive coverage. Be sure to check if there is a waiting period in case the vehicle is recovered.
You will then want to file a claim with your gap insurance and submit all requested documentation. While you are waiting for a determination on your claims, you should continue to make your loan payments so your credit is not negatively impacted.
Free Auto Insurance Comparison
Enter your ZIP code below to view companies that have cheap auto insurance rates.
Secured with SHA-256 Encryption
Understanding Whether Gap Insurance Covers Vehicle Theft
Gap insurance helps protect you from having an outstanding loan balance if your vehicle is stolen. You can purchase gap coverage when you buy your car or contact your car insurance company to add the coverage.
Even if your gap insurer doesn’t require you to have comprehensive coverage, you should add this protection to your auto insurance to avoid owing a large balance on your auto loan.
Worried about car thieves?😰Try not to stress! Your insurance might offer coverage if your vehicle is stolen! At https://t.co/27f1xf131D, we can help you understand all the perks that come with your coverage!👀Find out more here👉: https://t.co/GkLRGTrNIZ pic.twitter.com/2VFpPP7kmW
— AutoInsurance.org (@AutoInsurance) April 12, 2023
If your car is stolen, file a police report and provide all necessary documentation to your auto and gap insurance company to file a claim. Your claim will be investigated, so be prepared for it to take some time before you receive compensation.
Frequently Asked Questions
What is gap insurance?
Gap insurance is a type of insurance coverage that helps bridge the gap between the actual cash value of a vehicle and the amount owed on a car loan or lease. It can be beneficial if your vehicle is stolen or totaled, and the insurance payout is less than the outstanding balance on your loan or lease.
How does gap insurance work after a car is stolen?
If your car is stolen and not recovered, your primary auto insurance policy will typically provide a settlement based on the actual cash value of the vehicle at the time of the theft. Gap insurance steps in to cover the difference between the settlement amount and the remaining balance on your loan or lease, ensuring you are not left with a significant financial burden.
Will gap insurance pay off my loan after a car theft?
Yes, gap does cover stolen cars and will cover your remaining loan or lease balance up to the policy’s limit. In most cases, gap insurance will cover the remaining balance on your loan or lease after a car theft, up to the policy’s maximum coverage limit. However, it’s important to review the terms and conditions of your specific gap insurance policy to understand the coverage limits and any exclusions.
Are there any requirements or conditions to qualify for gap insurance coverage after a car theft?
The requirements and conditions for gap insurance coverage after a car theft may vary depending on the insurance provider and policy terms. However, some common conditions may include reporting the theft to the police, cooperating with the insurance investigation, and providing all necessary documentation and information to support your claim.
Can gap insurance cover other expenses related to a stolen car?
Gap insurance is primarily designed to cover the difference between the insurance settlement and the remaining loan or lease balance. It typically does not cover other expenses such as deductibles, unrecovered personal belongings, or additional costs incurred as a result of the theft. However, you may have other insurance policies, such as comprehensive coverage, that could provide coverage for these expenses.
How do I get gap insurance?
When you purchase your car, the car dealer will likely offer gap insurance with your financing package. You can also contact your car insurance company to add gap coverage to your policy.
Under a car lease arrangement, the company financing the lease will also offer gap insurance. You’ll likely have the option to add the cost to your monthly payment.
Why would a gap claim be denied?
A gap insurance company could deny your claim if your vehicle wasn’t deemed a total loss and only needs repairs.
How long does it take insurance to pay out on a stolen vehicle with Progressive?
Usually, the amount of time it takes insurers to pay out claims varies, but you can generally expect to have it within 30 days.
Does comprehensive insurance cover theft?
Yes, comprehensive coverage will pay out your vehicle’s market value if it gets stolen.
What do I do if my gap claim is denied?
Carefully review the denial notice from your gap insurance company to understand their reasoning. Once you identify the issues, gather any necessary documents or information to address your concerns and file an appeal. You could also consider consulting an attorney.
Free Auto Insurance Comparison
Enter your ZIP code below to view companies that have cheap auto insurance rates.
Secured with SHA-256 Encryption
Ty Stewart
Licensed Insurance Agent
Ty Stewart is the founder and CEO of SimpleLifeInsure.com. He started researching and studying about insurance when he got his first policy for his own family. He has been featured as an insurance expert speaker at agent conventions and in top publications. As an independent licensed insurance agent, he has helped clients nationwide to secure affordable coverage while making the process simpl...
Licensed Insurance Agent
Editorial Guidelines: We are a free online resource for anyone interested in learning more about auto insurance. Our goal is to be an objective, third-party resource for everything auto insurance related. We update our site regularly, and all content is reviewed by auto insurance experts.