(800) 253-1482Tennessee Gap Insurance Explained
Summary: Gap insurance is a valuable option for Tennessee drivers, covering the difference between a car's value and the remaining loan balance after a total loss, including theft. With the state's average auto loan debt exceeding $5,000, gap coverage can help prevent financial hardship. Drivers can often find more affordable gap insurance by comparing third-party carriers instead of relying on dealership options. Gap insurance is typically inexpensive, and bundling it with other policies can lead to even more savings. Estimated Read Time: 5 mins
After a car accident, there’s a lot to manage, and if you're leasing or financing your vehicle, it's easy to forget about covering your loan. Fortunately, gap insurance allows drivers to protect their finances and reduce stress.
In Tennessee, the average auto loan debt is around $5,230, which, while lower than in many other states, can still be a significant burden for many households.
Gap coverage helps cover your car loan balance, allowing you to concentrate on getting back on the road instead of worrying about payments for a vehicle that has been totaled or stolen.
What Is Gap Insurance In Tennessee?
Gap insurance helps Tennesse car owners who owe more on their car than it’s worth.
It covers the difference between your car's current value and what you still owe if your car is totaled or stolen, and because vehicles lose their value quickly, it's an important protection to consider, especially for drivers with newer vehicles.
While comprehensive and collision insurance can help you protect your vehicles, they won't help you cover all your costs, including paying off the remainder of your loan.
Without gap insurance, buying a new car after a loss could be tough, however, gap coverage can step in as an extra layer of protection for greater peace of mind that keeps you from having to pay for a car you can no longer drive have while trying to finance your new one.
How You’re Covered
If your vehicle ends up totaled after an accident or is stolen, if you have a note, your payments are still due.
Gap insurance helps drivers cover this expense by paying for the difference between your vehicle’s value and how much you still owe, once you’ve paid your deductible. Here’s an example:
- If you own a vehicle that still has $10,000 owed but its value is only $7,000, the difference is $3,000 and you’ll need to pay for this to your lender out of pocket.
- However, with gap insurance, you simply pay your deductible, and your coverage will pay the remaining $3,000 so that you don’t have to handle the financial loss all by yourself.
Leasing Vehicles
If you are leasing a vehicle, gap coverage can be a great protection to add to your policy.
While there are plenty of options from lease agreements available, you can save on your premium by getting insurance from a third-party carrier.
Be sure to compare your options among various companies to find the right protection and pay the lowest possible price.
Is Gap Insurance Worth It in Tennessee?
Gap insurance can be a great choice for many drivers, specifically, when they owe more on their vehicle than it is currently worth.
Commonly, gap coverage comes in handy when you are financing a vehicle with a small down payment, usually less than 20%, leasing a vehicle, or purchasing a new car in general, as they rapidly lose their value.
Drivers who are "upside-down" on their loan or lease early on will find gap insurance particularly useful, as the coverage will pay for the difference between what you owe and your car's value if it’s totaled or stolen.
For drivers prone to accidents, gap insurance offers an extra layer of protection, and it's also a smart safeguard for people in areas with high rates of car theft.
Because gap insurance is generally affordable, it’s a practical option for most drivers, regardless of budget.
Even with full coverage car insurance, financial risks like repair costs or unpaid loan balances can still arise.
Gap insurance helps Tennessee drivers overcome these risks, providing peace of mind after a major loss.
Pros and Cons of Gap Coverage in Tennessee
While many drivers can benefit from gap insurance, it’s not ideal for everyone. Here’s what drivers in Tennessee need to know when deciding if gap coverage fits their needs:
|
Pros |
Cons |
|
Premiums can be as low as $2 per month |
Drivers with older/less valuable vehicles may not benefit from this coverage |
|
Affordable protection for your finances |
Exclusions apply |
|
Helps drivers who lease and those who finance can afford a new vehicle after a major loss |
You cannot use gap coverage on previous loan balances |
Receiving a Refund
Drivers may qualify for a full refund when canceling gap insurance, but it depends on the policy.
Some policies only allow cancellations within 30 days.
Others allow refunds to be issued if you pay off your car loan early.
Selling your vehicle can also qualify for a gap insurance refund, as can switching your auto insurance coverage.
It's important to check the terms of your agreement and remaining loan balances for your policy’s specific conditions.
Not all gap insurance policies offer refunds, so consult with your insurance agent to understand your options.
How Much Is Gap Insurance in Tennessee?
The cost of gap insurance in Tennessee varies and is greatly affected by how much money you still owe on your vehicle.
For some drivers, you may pay a one-time fee costing several hundred dollars from a lender or dealer, however, monthly premiums from top-rated insurance companies are also available.
The cost from gap insurance companies will vary but can be as low as $2 per month depending on your loan, coverage, and the carrier you choose.
Where to Buy in Tennessee
If you would like to buy gap insurance, you have plenty of options. This includes car dealerships, auto loan lenders, and traditional auto insurance companies.
To avoid overpaying, it’s best to compare multiple coverages and carriers to find the right protection at the lowest price.
Furthermore, you can bundle your home insurance in Tennessee or a renters policy for better protection and more savings when enrolling with a carrier.
To shop quotes and enjoy savings from top-rated auto insurance companies, use our free, no-obligation auto insurance quote tool below:
Are you looking to speak to a real person? No problem! Call the number found at the top of the page or click the link to ask an agent about gap insurance and how we save clients 40% on average when switching their auto policies.
