How much is gap insurance in South Dakota

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Drivers in South Dakota pay $2,375 per year for gap insurance – $478 more than the national average.

Gap insurance, available from top insurers like Nationwide and Auto-Owners, 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 South Dakota, the average rate is $2,375 per year, or about $198 per month.

What is gap insurance?

Gap insurance is optional vehicle insurance coverage that helps pay off an auto loan or lease if your vehicle is totaled or stolen and you owe more than the car’s depreciated value.

Most car buyers finance their vehicles by taking out a loan. But it’s easy to forget that cars depreciate as soon as they’re driven off the lot. Often, owners are driving vehicles that are worth less than what they owe their finance company.

If that car is totaled, the owner’s comprehensive or collision insurance reimbursement will be based on the vehicle’s actual cash value, not the loan balance. If the actual cash value is below the loan balance, the owner is responsible for the difference.

However, gap insurance can make up the difference.

“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 South Dakota

What you pay for gap insurance will depend on your carrier, the state you live in, the make and model of the car you insure, as well as other factors. The average cost of gap insurance in South Dakota is $2,375 per year, or $198 per month.

“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 (Triple-I), 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 South Dakota

In South Dakota, Nationwide provides the most affordable gap insurance, at $1,600 per year or $133 each month. On the other hand, Progressive has the highest premiums at $3,259 annually or $272 monthly.

The chart below shows the average annual cost of gap insurance from various insurers in South Dakota.

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How much is gap insurance per month in South Dakota?

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

Gap insurance rates in South Dakota’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 South Dakota.

Gap insurance rates for different vehicle types

The type of vehicle you drive is a key factor insurers use to determine your gap insurance rate.

“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.

Your vehicle’s age is one of the important factors that can influence gap insurance rates.

“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?

It’s a good idea to keep gap insurance for as long as you’re financing or leasing your vehicle, since it protects you from owing more than the car’s depreciated value.

“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.

You can cancel gap coverage once your loan balance dips below the car’s actual cash value. Many insurers automatically end the coverage after a set number of years for the same reason.

Where to buy gap insurance

Gap coverage is sold in three places, and each has its own price tag and rules:

• Your auto insurer: Most national and regional carriers let you add gap as a rider to your regular policy for about $20 to $40 a year. Because it’s part of your insurance bill, you can cancel it as soon as your loan balance drops below the car’s value, so you never pay for coverage you don’t need.
• Dealerships: Finance managers often offer gap insurance for $400 to $700, rolled into your loan. It’s convenient but typically the most expensive option due to added interest.
• Banks and credit unions: Some lenders offer gap insurance as a standalone policy. It’s usually mid-priced, but cancellation rules vary; some refund unused premium, 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

Comparing gap insurance rates from multiple insurers can save you money. Your state, vehicle type, and personal factors all play a role in pricing, so shopping around could help you find significantly cheaper coverage.

Whether gap insurance makes sense for you depends on the age and value of your financed or leased car. When speaking with insurers or agents, don’t hesitate to ask questions – understanding your coverage fully is key to making the right choice.

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.

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