Does Esurance Have Gap Insurance?
Esurance is one of several insurance providers that offer gap insurance. Here’s what it is, and why you might need it!
Written by Amber Reed
Reviewed by Pat Roache
You can add
gap insurance
to a preexisting full-coverage policy from Esurance for a leased or financed vehicle. This means if the car is stolen or totaled while you owe more on your car loan
than it's worth, your gap insurance covers the difference—so you don’t have to.Who knew there were so many different kinds of
car insurance
, right? Gap insurance can seem a little confusing at first, but it’s pretty straightforward. Read on for a guide to the gap insurance offered by Esurance—what it is, why you might want to buy it, and whether it’s best to purchase it from your lender or your insurance provider. Does Esurance offer gap insurance?
Yes, Esurance sells gap insurance.
Let’s start with the basics! Gap insurance stands for “guaranteed asset protection” and protects you from the rapid depreciation that new cars experience in the first few years of their existence. If your car is totaled when its
actual cash value (ACV)
is less than the balance of your loan, gap insurance makes up the difference—the financial gap, if you will. New vehicles lose value at an astonishing rate. Depending on the price of your car and/or the terms of your financing, it’s possible that in the early phase of your loan, your car might be worth less than what you owe on it. This is sometimes called “negative equity” or an
upside-down car loan
, and it’s a sketchy position to be in.If you
total your financed car
in an accident or it gets stolen during this time, the amount your insurance pays out might not be enough to cover the balance of your loan. This means that you’ll have to pay back the rest of your loan out of pocket—unless you have gap insurance, that is!RECOMMENDED
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How does gap insurance work with Esurance?
If you have a
full coverage policy
with Esurance, then you can add on a gap insurance policy for a relatively low cost. Since the purpose of gap insurance is to make up the difference between your insurance payout and your loan balance, it would be nonsensical to get gap insurance without a full-coverage policy. And if you’re financing a car, most lenders require you to get full coverage insurance anyway.Esurance’s gap insurance policy is pretty cut and dry. If your car is totaled when it has negative equity, it will make up the difference for up to 25% of your car’s ACV. Let’s look at an example.
- You purchase the new car of your dreams for $50,000. You make a 10% down payment of $5,000 and finance the remaining $45,000.
- Two months later, you reluctantly agree to let your weird cousin drive your new wheels, and they total it. Due to depreciation, the ACV of your car is $42,000. And your cousin is now banished from family events for the foreseeable future.
- After your $1,000 deductible, you get an insurance payout of $41,000. However, you still owe $44,000 on your loan.
- Gap insurance to the rescue! You file a car insurance claim, submit the proper documentation, and the $3,000 deficit is paid off since this is well below the 25% limit of $10,500 at the time the car was totaled.
Gap insurance can’t be used to pay for
car repairs
or put towards the cost of a new vehicle. Esurance’s gap insurance payouts do have a cap of 25% more than the car’s ACV, but there would have to be some pretty rough financing conditions for someone to exceed that. Bottom line? Do the math regarding your particular loan and see if gap insurance makes sense for you! Esurance paved the way for online car insurance services, so you can likely add coverage online with ease if you already have a policy. If you’re still deciding on what provider to choose, comparing
car insurance quotes online
is quick and easy, and can save you a lot of money!Is it better to buy gap insurance from the dealership or your insurance company?
If you’ve chosen to
finance your vehicle in-house
through the dealership, you’ll generally have the option of purchasing your gap insurance through them. It’s often included automatically, so make sure to read the details of your agreement! If you're financing through your bank or credit union, they might offer gap insurance as well. But here’s the deal—getting your
gap insurance through the dealer
or a lender is generally the more expensive option. Here’s why: the full cost of your gap insurance policy (usually less than $1,000) is included in your total loan amount. That means you’ll be paying interest on it. But if you get it through your insurance provider, it’s just a small monthly fee that’s added to your regular premiums—no interest charged.
Is gap insurance worth it?
In many circumstances, gap insurance is a wise choice. It’s not expensive to purchase, and it can save you thousands of dollars in the event your new car is totaled or stolen.
When you’re considering gap insurance, take into account factors like the length of your loan, the interest rate, and how much the car costs versus the value of your
trade-in
and down payment
. If you have a long loan term or a smaller down payment, then a gap insurance policy is probably a good choice. And while gap insurance isn’t legally required in any state, lenders often require it as a term of the lease or loan to protect their assets. Once your car’s loan balance is less than your car’s ACV, you can see about canceling the gap insurance policy.
How to find the best gap insurance
Gap insurance is typically offered by the larger insurance providers, but not by all of them!
GEICO
and State Farm
are two of the biggest names in the game—but they don’t offer gap insurance. If you’re considering purchasing a gap insurance policy from Esurance, shop around and compare quotes from at least three different providers before you decide on one. "I decided to tryJerrybecause my car insurance had been increasing drastically with each policy renewal. Jerry found me multiple ways to save after entering just a few pieces of info! I’m saving almost $70 a month after choosing Nationwide.” —Ish M.
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