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Overpaying on car insurance?

State Farm Gap Insurance: Is It Worth it?

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Your car’s value starts depreciating immediately after you drive it off the car lot. If you have financed your car, would be unfortunate and costly if your car is totaled or stolen before the loan is paid off. Gap insurance is the hedge against such financial uncertainty. State Farm, one of the largest auto insurers in America, provides unique coverage with customer-friendly pricing. Let’s review everything about State Farm gap insurance and whether it’s right for you.

What Is State Farm Gap Insurance?

State Farm doesn’t expressly use Guaranteed Asset Protection (GAP) to denote asset protection. State Farm offers Payoff Protector, which is similar to gap insurance offered by other firms. If you already have car insurance, you might wonder why you’d need another policy.

Imagine this scenario: You’ve driven off the lot with your new automobile that you’ve financed through the dealership, credit union, or bank. But days later, your car gets stolen or totaled. If this were to happen, you’d be on the hook to pay off the loan, as well as finding funds to buy another car. Payoff Protector provides the financial protection you need.

Gap insurance covers the gap between the car’s book value and the vehicle’s actual cash value (ACV). Say your sleek car costs $35,000, and you still owe $15,000 on the car; after your car is totaled, suppose your ACV is $10,000. This means you’ll have a $5,000 deficit to pay for out of your pocket. If you have gap insurance, it will cover the $5,000 gap.

Gap insurance only covers the cost after your car has been stolen or totaled while you’re still financing it. You may not always need gap insurance, but it can save you tons of cash if you have it.

Pros and Cons of State Farm Gap Insurance

State Farm has become an insurance juggernaut by providing driver-oriented insurance products with honest pricing points. The pricing points lean on the pricey end, but State Farm justifies the cost through discounts based on mileage, type of car, and even student grades. Like all big auto insurance companies, State Farm has received its fair share of criticism and backlash from customers and state insurance departments. It also has plenty of benefits to make up for that, though. The following are the pros and cons of State Farm insurance:

Pros

  • Custom discounts for family, business, and personal automobiles
  • High levels of customer satisfaction
  • Generous coverage, such as roadside assistance and ride-sharing coverage
  • Customizable insurance

Cons

  • No explicit gap insurance
  • Delayed claims

State Farm rolls various insurance policies into one. If you’re on full coverage from the insurer, it may cover collision and medical expenses. It’s best to contact the agent and determine what policy you have and the costs it covers. Many customers who have provided first-hand experience say that the insurer’s targeted approach to each unique insurance need is what draws plenty of drivers to buy State Farm gap insurance (Payoff Protector).

When Do You Need State Farm’s Gap Insurance?

Image via Flickr by QuoteInspector.com

There are specific situations that naturally lend themselves to gap insurance. If you’re leasing or financing a car, your dealer or bank will most likely mandate gap insurance. If you finance a vehicle purchase through State Farm Bank, they’ll automatically roll your Payoff Protector into the monthly payment amount for your loan.

If you lease a car, you’ll also need gap insurance. You can purchase the insurance from some dealerships or buy the policy later directly from the firm. Your car’s mileage, the value of your vehicle, and your location will influence the quoted rate you’ll receive.

You may purchase the Payoff Protector under your comprehensive coverage, although you may pay more on premiums. Insurance policies for State Farm are available on their website, or you can contact them at 866-207-9079 for more details on their insurance policy.

When You Don’t Need State Farm Gap Insurance

Not everyone needs gap insurance, though. If you bought your car outright, you may not need gap insurance. However, one exception may be if you own the vehicle and live in a high-risk area, such as one that has a high rate of accidents or car thefts. You’ll need gap insurance to protect yourself from financial loss if you need to buy another car.

Ensure you keep your vehicle healthy to avoid difficulties with insurance firms if you need to submit claims. Keep in mind that State Farm may not offer Payoff Protector if your car is old or if your vehicle is in the six-digit range.

How to Get State Farm Gap Insurance

State Farm offers a seamless insurance application and settlement process. You can purchase your policy on the app, with a phone call, or through a physical visit to one of the agencies all over the country. Be sure to do your research and read through all the policy documentation before signing. If you’re not the reading type or want some help with finding the best policy for your needs and circumstances, you can contact an insurance agency to do all the heavy lifting for you. You’ll part with a few bucks for the service.

Why State Farm Gap Insurance?

State Farm has grown to be the insurance giant it is today through honest pricing and fast settlements. Gap insurance from the company is the go-to solution when you have leased a car or purchased it through a loan. Real-time quotes and customer-oriented approaches are why millions of Americans love State Farm.

Final Verdict

State Farm’s honest pricing points and driver-oriented insurance policies compel us to rank it among the top insurance firms that actually deliver on what you need. While some customers have expressed negative views of State Farm, they tend to have trouble with the property and medical insurance State Farm offers, rather than auto insurance. State Farm vehicle insurance is also ideal for young drivers. In many states across America, State Farm is the top gap insurer. Is State Farm gap insurance worth it? If you’re financing your vehicle, then there’s a good chance you need it.

FIXD Research Team

At FIXD, our mission is to make car ownership as simple, easy, and affordable as possible. Our research team utilizes the latest automotive data and insights to create tools and resources that help drivers get peace of mind and save money over the life of their car.

We’re here to help you simplify car care and save, so this post may contain affiliate links to help you do just that. If you click on a link and take action, we may earn a commission. However, the analysis and opinions expressed are our own.

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About the Author

FIXD Research Team

FIXD Research Team

At FIXD, our mission is to make car ownership as simple, easy, and affordable as possible. Our research team utilizes the latest automotive data and insights to create tools and resources that help drivers get peace of mind and save money over the life of their car.

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