How much is gap insurance in Delaware

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Drivers in Delaware pay $2,132 per year for gap insurance – $235 more than the national average.

Gap insurance, available from top insurers like Progressive and American Family, helps protect drivers who lease or finance their vehicles. If your car is totaled or stolen, it covers the difference between its value and what you still owe on your loan or lease. Some insurers may refer to it as loan or lease payoff coverage.

Your state affects how much gap insurance costs. In Delaware, the average rate is $2,132 per year, or about $178 per month.

What is gap insurance?

Gap insurance protects you if your car is totaled or stolen and your loan balance is higher than the car’s value. It pays the difference between what your car is worth and what you still owe, so you’re not stuck covering that amount yourself.

If you’ve financed your car, it’s likely worth less than what you owe-especially in the first few years. That difference can leave you financially vulnerable if your vehicle is totaled or stolen.

Insurance companies pay out the actual cash value of your car if it’s totaled, which is usually less than what you owe on your auto loan. Without gap insurance, you’ll have to pay the remaining loan balance yourself. With gap insurance, that financial gap is covered.

“When an accident or theft occurs, a driver usually gets paid out on the vehicle’s cash value from their standard insurance coverage,” says Richard Howe, a car accident attorney in Atlanta. “However, without gap insurance, you will still be on the hook for the remaining amount in your agreement. Gap insurance provides peace of mind to drivers that they will be financially protected.”

“For instance, let’s say your car is totaled and the actual cash value is determined to be $15,000. However, you still owe $20,000 on your loan. Traditional auto insurance would only cover up to the actual cash value, leaving you with a $5,000 deficit,” says Howe.

“But if you have gap insurance, this difference would be covered, relieving you of the financial burden.”

Average cost of gap insurance in Delaware

Gap insurance rates vary depending on your insurer, location, vehicle type and other factors. In Delaware, drivers pay an average of $2,132 per year or about $178 per month for gap coverage.

“Gap insurance is an optional coverage that is usually very reasonably priced, typically less than $100 per year in additional premium when added as an endorsement to your existing auto insurance policy,” says Mark Friedlander, senior director of media relations at the Insurance Information Institute, an insurance industry trade group.

“Gap insurance rates are based on the amount of your loan or lease agreement. It is typically not based on other common rating factors such as credit record.”

Cheapest gap insurance companies in Delaware

Progressive has the cheapest gap insurance rates in Delaware at $2,045 per year or $170 per month. On the other hand, Sentry Insurance offers the most expensive premiums at $4,090 annually or $341 monthly.

The table below shows average annual gap insurance rates from different insurance companies in Delaware.

How much is gap insurance per month in Delaware?

Gap insurance costs differ, but here’s what you might pay each month:

Gap insurance rates in Delaware’s top cities

Gap insurance rates can vary based on where you live. The table below shows the average annual cost in major metro areas across Delaware.

Gap insurance rates for different vehicle types

Your gap insurance rate can vary depending on the make and model of your car.

“Luxury cars, sports cars, and SUVs – typically with higher purchase prices – might also come with higher gap insurance premiums. That’s because these vehicles tend to depreciate at different rates compared to standard sedans or compact cars, posing a greater risk to insurers,” Howe says.

The age of your vehicle plays an important role in how much you pay for gap insurance.

“Newer vehicles, which depreciate more rapidly in the first few years, represent a higher risk for insurers offering gap coverage. As a result, a brand-new car might attract a higher gap insurance premium compared to a model that is several years old,” Howe says. “This reflects the insurer’s risk assessment, considering the steeper depreciation curve and the greater likelihood of a significant gap needing coverage soon after the purchase.”

When does gap insurance expire?

If you’re still paying off your car or leasing it, gap insurance can give you peace of mind in case it’s totaled and you owe more than it’s worth.

“However, Gap insurance is typically most relevant during the first few years of new car ownership,” Howe says.

That’s usually when you owe more on your loan than the car is worth.

“Most car buyers benefit from gap insurance when the vehicle is less than three model years old. This coverage is usually aligned with the duration of the car loan or lease, often making it unnecessary beyond a few years because the loan balance decreases to fall below the car’s actual cash value,” Howe says.

It’s a good idea to cancel gap coverage when your loan balance is lower than your car’s actual cash value – in fact, many insurers will cancel this coverage after a few years for this exact reason.

Where to buy gap insurance

There are three main ways to buy gap coverage, each with a different cost and set of rules.

• Your auto insurance company: Many national and regional insurers offer gap coverage as an add-on to your regular car insurance policy, typically costing between $20 and $40 annually. Since it’s bundled with your policy, you can drop it once your loan balance is lower than your car’s current value.
• Dealership: Gap insurance is usually offered by finance managers for anywhere between $400 and $700, and the cost is often rolled into your loan. While it’s convenient, this option tends to be the priciest because you’ll likely pay interest on it over time.
• Banks and credit unions: Some banks and credit unions offer gap insurance as a standalone policy. It is usually affordable, but the cancellation rules vary – some providers refund unused premiums, while others don’t.

Before you buy gap insurance, compare rates, check cancellation policies and look for perks such as deductible reimbursement. Shopping around can help you save big over your loan or lease term.

The bottom line

Gap insurance offers valuable peace of mind for drivers with financed or leased cars, especially during the first few years when depreciation outpaces loan repayment. Because rates vary based on where you live, your vehicle, and other personal factors, comparing quotes from different insurers is essential.

Weigh the cost against the potential risk, and ask your insurer or agent to clarify any details. Making an informed choice now can help you avoid financial stress later.

Methodology

Insure.com commissioned Quadrant Information Services in 2023 to get annual and monthly gap insurance rates for male and female drivers aged 40 who drive a Honda Accord LX with a clean driving record and good insurance score and carry a full coverage car insurance policy with limits of 100/300/100 and $500 comprehensive/collision deductibles.

To evaluate the rates, we have compared 53,409,632 insurance records from 170 insurance companies across 29,152 cities and 34,588 ZIP codes across the nation.

Shivani Gite

Contributing Writer

 

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Shivani Gite is a personal finance and insurance writer with a degree in journalism and mass communication. She is passionate about making insurance topics easy to understand for people and helping them make better financial decisions.