Guide to Gap Insurance in Pennsylvania

Gap coverage is a type of insurance that would cover the remainder of your lease or loan if your vehicle was totaled, which in Pennsylvania, means that its salvage value is less than the cost of the repairs.¹ In other words, if you totaled your car, you wouldn’t be responsible for paying the remainder of the lease or the loan; instead, your gap insurance would kick in.

What It Covers

Gap insurance applies to car accidents and auto thefts.

What It Doesn’t Cover

Gap insurance does not cover your deductible if you have collision insurance or a comprehensive coverage claim. It will also not cover missed loan payments or late fees, total losses from mechanical failures, bodily injuries, funeral costs, lost wages, or any medical expenses — only vehicle losses.

Imagine you bought a new car with a loan of $40,000 and gap insurance and a month later your car was totaled in an accident. Let’s say the vehicle would cost $20,000 to repair, but its salvage value is only $10,000. If that’s the case, you’d pay your deductible for collision coverage, and then your gap insurance would pay the remainder of your loan.

In Pennsylvania, gap insurance costs around $200 to $700 per year. It’s most affordable if you buy it as an add-on to your existing car insurance and more expensive if you buy it from your car’s manufacturer, your dealership, or your lender.

Here are the average prices for gap car insurance coverage in Pennsylvania.

Pennsylvania does not require gap insurance, only liability and medical payments coverage, so there are no laws surrounding it.

The amount of gap insurance you need is equal to the size of your loan or lease because you could total your car as soon as you leave the dealership. You want to make sure that if that happened, you wouldn’t be responsible for paying the balance out of pocket.

Gap insurance isn’t only worth it; if you have a loan or lease, it’s most likely required, along with collision and comprehensive coverage.

Who Should Buy Gap Insurance

You should buy gap insurance if …

• You are leasing your vehicle.
• You owe more on your car than it’s worth.
• You put down less than 20 percent when you financed your car.
• Your financing term is five years, or 60 months, or longer.
• You rolled over negative equity from an old car loan into your new car loan.
• Your vehicle is a luxury car, which depreciates faster than average.

Here’s how to find the best gap insurance.

When to Get It

Make sure to get gap insurance before you drive your financed or leased vehicle, as you can total it at any time.

Options

Your main options for getting gap insurance are as follows:

• As an add-on to your existing auto insurance policy
• Through the manufacturer or lender
• Through a car dealership

Again, if your insurance company offers it, it’s cheapest to get gap insurance from your existing insurer. Request a car insurance quote today.

Best and Cheapest Companies

Some companies that offer gap insurance in Pennsylvania include the following:

• Allstate
• Bristol West
• Clearcover
• Dairyland
• Direct General
• Esurance
• Liberty Mutual
• Midvale Home & Auto
• Nationwide
• Plymouth Rock
• Progressive
• Safe Auto
• The Hartford
• Travelers

There are many advantages to paying for your car with an auto loan or leasing your car on a short-term basis. However, one disadvantage is that you will have to buy more car insurance coverage — not only just gap insurance, but also comprehensive and collision coverage. Of course, you’ll appreciate these coverages if you total your car, whether that occurs in the Keystone State or anywhere else in the country.

While it’s not nearby, if you want to learn more about gap insurance in another state, read our article on gap insurance in Arizona. Just like in Pennsylvania, Arizona drivers can benefit from getting their gap insurance from their existing car insurance provider, which would cost around just $25 annually.

Learn more about how car insurance works for leased vehicles, which have more car insurance requirements than vehicles you buy outright. Since you’re not the owner, the lessor will want to protect its property from risk, and that means making sure it will get the total value back if the car is totaled.