Does Mercury Have Gap Insurance?
Mercury Insurance offers loan/lease payoff coverage instead of gap insurance, but you have a short timeframe to add the coverage to your policy.
Written by Melanie Krieps Mergen
Reviewed by Shannon Martin
Mercury Insurance offers loan/lease payoff insurance instead of gap coverage to all their customers except for drivers in New York. Loan/lease coverage is similar to gap insurance with some additional limitations. Contrary to other insurance providers, Mercury only allows a 30-day window from when the vehicle is purchased to add this coverage.
Depreciating car values, fluctuating market conditions, and less-than-ideal car loan terms are all factors that could leave you with an
upside-down car loan
—which is a loan with a balance that’s higher than your vehicle’s actual value. If your car were to get totaled, you’d be responsible for paying off that remaining difference—without even having a vehicle to show for it.Luckily, gap insurance can protect you from this financial headache, but if Mercury is your
car insurance
provider, you may have to do some shopping around to find it. Here’s what you should know about gap insurance and your options with Mercury.Compare insurance quotes from 50+ carriers with Jerry in under 45 seconds (Title in payload)
4.7/5 rating on the App Store | Trusted by 5+ million customers and 7 million cars4.7/5 app rating | Trusted by 5M+ driversDoes Mercury offer gap insurance?
Mercury does not offer gap insurance, but they do offer loan/lease payoff coverage in the 9 out of 10 states where Mercury insurance is available. So while the state of
New York
does not have gap or loan/lease coverage options with Mercury, if you live in one of the following states, you are in luck: NV, AZ, IL, OK, FL, GA, NJ, TX, and VA.Guaranteed Asset Protection, more commonly referred to as
gap insurance
, is a type of insurance that covers the difference between your car’s actual value and the remaining balance on your car loan if it ends up totaled or stolen.Gap insurance is different from
new car replacement insurance
, which will help you cover the cost of buying a vehicle with a comparable value after yours is totaled. It is similar to Mercury’s loan/lease payoff, but loan/lease payoff coverage has a lower payout cap than gap insurance does. Without opting for one of these coverage options, you’ll be on the hook for any outstanding balance on your car loan if it surpasses your vehicle’s worth.Most major car insurance providers offer gap insurance as a coverage option, but some companies, like
GEICO
, don’t.How does gap insurance work with Mercury?
Mercury’s loan/lease payoff can only be purchased with the following stipulations:
- Vehicle is leased or financed
- Must be purchased within 30 days of the vehicle purchase
In combination, comprehensive and collision coverage is referred to as full coverage. If your vehicle is totaled or stolen, these coverages from Mercury will pay up to your vehicle’s
actual cash value
or (ACV), minus your deductible
and any other applicable costs. But if your car loan balance exceeds that value, your “full coverage” will become a bit of a misnomer. That’s because
if you don’t have gap coverage
, you’ll still be responsible for making your car loan payments until it’s paid off in full, even though you no longer have the car. If you have purchased loan/lease payoff coverage, it will pay the difference between the vehicle’s ACV and lease or loan balance minus the deductible. However, there is a limit to how much over the ACV Mercury will cover; here is a list of expenses you may still be responsible for:
- Loan/lease payoff will not payout more than 25% of the vehicle’s ACV
- Wear and tear
- Fees associated with collection or repossession
- Past due payments
- Warranties
MORE: How to pay off your car loan faster
What to do if you have Mercury and need gap insurance
Gap insurance is generally considered an optional form of coverage, and you won’t have to worry about it if you purchase your vehicle with your own funds. If you use a car loan to buy your vehicle, however, some lenders will require you to have it.
Car lease
agreements will typically require gap insurance as well.So, if Mercury is your current car insurance provider and you live in New York or missed the 30-day window, where does that leave you for
gap coverage
options? While it can sometimes cost more, you’ll often have the option of getting gap insurance through the vehicle dealership, bank, or credit union you’re getting your car loan from. Some insurance providers also offer gap insurance as a standalone policy.
If you prefer to have all your insurance coverage handled by one place—and this usually ends up being the most cost-effective option—you also have the option of shopping around for
car insurance quotes
from other providers. Allstate
, Nationwide
, and Progressive
are all examples of providers that do offer gap insurance. If you can find the coverage you’re looking for while also getting a lower rate, it might be worth switching to a new policy.
MORE: 4 mistakes you should never make when switching car insurance
Is gap insurance worth it?
Gap insurance is worth it in many cases. With average costs between between $20 and $40 per year, it’s a relatively inexpensive type of coverage, and it’s possible it could save you thousands of dollars in the long run.
New vehicles tend to
depreciate
rapidly during the first several years of ownership. If your car’s value starts to decline faster than your loan balance, despite your regular payments, you could end up with an upside-down car loan. And if your vehicle is totaled during this time, you could end up with a lingering car loan payment and no vehicle to show for it.Gap insurance is generally a cost-effective coverage option, and it becomes increasingly more so the larger the difference between your car’s value and loan balance becomes.
You can always cancel your gap insurance once your car loan balance is no longer more than your car’s actual worth—and you can usually expect to
get a refund
when you do.Because market conditions can always be subject to change, it’s a good idea to periodically check on your vehicle’s value and compare it with your loan balance to determine whether or not gap insurance would be in your best interest.
MORE: The best car insurance for bad credit drivers
What is the most gap insurance will pay?
The absolute maximum that gap insurance will cover is the remaining balance left on your car loan. Every company has a different limitation on the payout amount, some have a flat $25,000 limit, while others may cap it off at 25% or 50% over the ACV.
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