What Is Gap Insurance in Colorado?
What Is Gap Insurance in Colorado?

What Is Gap Insurance in Colorado?

If you financed a brand new vehicle deemed a total loss in an accident, you could recover financial compensation through gap insurance.
  • Denver Personal Injury Lawyers® has over six decades of experience helping injured people. We have a proven track record of success for our clients. Our law firm has been around for a long time because we get great results and don’t take advantage of people.
  • Our lawyers are featured in The Best Lawyers of America 2024 Edition for Personal Injury is an honor that reflects our excellence in the field. This recognition is based on a rigorous peer-review survey, where leading attorneys evaluate the professional abilities of their colleagues within the same geographical area and legal practice area. Other lawyers in the field confirm our reputation for delivering outstanding legal representation to our clients.
  • Our personal injury lawyers have achieved a 10.0 AVVO rating, the highest possible score, signifies our attorneys’ substantial experience and successful track record. This rating considers various factors, including years of practice, disciplinary history, professional achievements, and peer endorsements. Attorneys with a history of winning complex, high-stakes cases are more likely to achieve this rating, which serves as a benchmark of excellence and reliability in the legal profession.
  • Our attorneys are members in the Million Dollar Advocates Forum is one of the most prestigious acknowledgments a trial attorney can receive. Less than 1% of attorneys in the United States are members of this elite group, which is reserved for those who have won million-dollar or multi-million-dollar verdicts and settlements. This exclusive membership demonstrates our lawyers’ exceptional skill and success in handling significant personal injury cases.

Denver Personal Injury Lawyers® stands out due to our commitment to client success and our extensive expertise in personal injury law. Our attorneys have consistently secured favorable outcomes for clients, earning reputations for diligence, compassion, and legal acumen. Simply put, they are the toughest around, but also fair. Our firm is dedicated to providing personalized service, ensuring that each client receives the attention and support they deserve throughout their legal journey. You can count on Denver Personal Injury Lawyers® to have your back.

Gap insurance in Colorado means “guaranteed asset protection.” Gap insurance is a type of insurance you can use if your car is a total loss after an accident. Specifically, this type of insurance will pay the difference between the outstanding car loan and the insurance coverage. The name suits the purpose of filling in the “gap” for specific drivers. Gap insurance can benefit drivers with financial risk when driving a new vehicle.

What Is Gap Insurance?

If you financed a brand new vehicle deemed a total loss in an accident, you could recover financial compensation through gap insurance. Gap insurance covers losses from various causes, including car accidents, natural disasters, fires, and theft.

So, let’s say you get into a vehicle collision with a car you still owe a loan on. If you owe more than auto insurance covers, gap insurance will cover the difference.

How Does Gap Insurance Work in Colorado?

Gap insurance is not standard coverage included in car insurance policies. Therefore, most drivers probably don’t have gap insurance as a top priority when purchasing a car and getting an insurance policy. However, it can be an excellent investment to prevent a whopping out-of-pocket bill in the event that your vehicle becomes damaged beyond repair.

Before you decide if gap insurance makes sense, it’s important to understand how it works. Gap insurance is not a catch-all policy with add-ons like towing, rental reimbursement, or lost items in the vehicle. It will strictly cover the difference between an outstanding loan balance and the insurance payout. If your vehicle is a total loss after an accident, gap insurance won’t cover rental or replacement vehicle costs either.

Standard insurance policies in Colorado cover liability and comprehensive or collision coverage. Gap insurance, on the other hand, addresses a very narrow aspect of risk. Typically, since gap insurance is designed to cover the difference on newer financed vehicles, policyholders don’t get it for cars older than one model year.

When Do You Use Gap Insurance?

You would use gap insurance after a total loss of a vehicle. For example, total losses are common after serious car accidents. But, there are other types of damage that gap insurance can cover. The determining factor for whether gap insurance can be applied is not the cause of the damage but the totality of the loss.

For example, let’s say you get into a car crash, and your insurer pays you $15,000. However, if you still owe $20,000 on the loan and have gap insurance, you’re on the hook for $5,000. Gap insurance would cover the $5,000 difference. Therefore, they would pay the difference to the lender to repay the loan.

You may want to consider buying gap insurance for your new car or truck if:

  • You made less than a 20 percent down payment on your vehicle and now have a big auto loan
  • You financed your vehicle on a long-term loan
  • You leased a vehicle (in which the owner or dealer may require you to carry gap insurance)
  • If you purchased a vehicle that depreciates faster than average
  • You have roll-over negative equity from a previous car loan into a new loan
  • If you drive more than 15,000 a year ( as this will speed up depreciation)

How Is Gap Insurance Difference From Other Types of Coverage?

The value depreciates when you lease a new car or truck. As a result, most cars lost 20 percent of their value within one year. Standard car insurance policies cover the depreciated value of a car. So if you get into an accident, a standard insurance policy might reimburse you for the current market value of the vehicle at the time of the claim. Standard insurance policies also have three common components – liability, collision, and comprehensive coverage. These types of coverage generally provide financial protection from third-party claims, property damage, and injuries.

On the other hand, gap insurance is related to collision and comprehensive coverage. It’s intended to assist you if your vehicle is destroyed. It will also cover the difference between what your vehicle is currently worth and what you owe on the car loan.

Where to Buy Gap Insurance in Colorado?

You can purchase gap insurance in several different ways in Colorado. First, you can buy it as an add-on to your current insurance policy. Most gap insurance policies with collision and comprehensive coverage will only add about $20-$40 to your annual premium. It may be cheaper to buy it from an insurance company than a dealer.

You can also go directly through a dealer. However, going through a dealership could cost you $400-700 a year. Or, you could buy it through the lender who financed the purchase of your vehicle. If you buy it from a dealer or lender, it’s often packaged as part of the loan.

It’s best to compare the costs through a dealer or lender with a quote from your insurance to ensure you get the best rate.

Is Gap Insurance Required in Colorado?

No. Gap insurance is not a requirement in Colorado. However, car dealerships and leaders often require gap insurance as a condition of a financed sale. Since many drivers have a significant financial investment at stake, they opt to buy gap insurance coverage.

Can I Cancel My Gap Insurance Coverage?

You can sometimes cancel a gap coverage policy with a prorated refund. That means

In most cases, you can cancel a gap coverage policy with a prorated refund. If you plan on canceling, make sure any loan balance has been reduced to a level well below your vehicle’s actual cash value. Then, contact your gap insurance provider for specific details regarding the cancellation.

Gap Insurance Companies in Colorado

Insurance companies in Colorado offer gap coverage as optional add-ons to car insurance policies. In addition, carriers and dealers like Allstate, Liberty Mutual, Nationwide, Credit Union of Colorado, and Automotive Search, Inc., provide gap insurance in Colorado.

Contact a Denver Car Accident Lawyer Today

If you have any further questions about your insurance policy, claim, or dispute, contact our experienced attorneys today.

You can schedule a free, no-obligation, initial consultation or call (720)500-HURT.

Sharing is Caring....
Facebook
Twitter
LinkedIn
WhatsApp
Email

Free Consultation

Fill out the form below and one of our attorneys will get back to you as soon as possible.





    Find What You're Looking For

    Denver Personal Injury Lawyers®

    Tel: 720-500-HURT
    Tel: 720-500-4878
    Fax: 720-265-9998

    Denver Office
    1001 Bannock St #8
    Denver, CO 80204

    Arvada Office
    5610 Ward Rd #300
    Arvada, CO 80002

    Centennial Office
    9200 E Mineral Ave #100
    Centennial, CO 80112

    Lakewood Office
    355 S Teller St #200
    Lakewood, CO 80226

    Free Consultation





      Don’t Go Before Getting Help With Your Injury Claim!

      We provide an experienced team of lawyers who deal solely with personal injuries cases. We get results quickly so that you can move forward with your life.