How much is gap insurance in South Dakota

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Gap insurance costs $2,375 annually in South Dakota, which is $478 more than the national average.

Offered by many leading insurers, such as Nationwide and Auto-Owners, gap insurance serves as a financial safety net for drivers who finance or lease a car. It bridges the gap between the vehicle’s actual cash value and the outstanding balance owed on an auto loan or lease if the car is declared a total loss, such as after an accident or theft. Your insurer may also call it loan or lease gap coverage.

Gap insurance rates vary by location, but in South Dakota, you can expect to pay around $2,375 annually, which breaks down to about $198 each 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 South Dakota

The cost of gap insurance varies depending on your insurance company, location and the type of car you drive. On average, gap insurance in South Dakota costs $2,375 annually or $198 each 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, director of corporate communications for 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 South Dakota

Nationwide offers the cheapest gap insurance rates in South Dakota, at $1,600 annually or $133 monthly. On the other hand, Progressive offers the most expensive rates at $3,259 per year or $272 per month.

The chart below looks at the average annual rates insurers charge for gap insurance in the state.

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How much is gap insurance per month in South Dakota?

Gap insurance rates vary, but here’s what you can expect to pay for gap insurance every month:

Gap insurance rates in South Dakota’s top cities

Gap insurance rates often depend on your location. The table below lists the average annual costs 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?

If you’re financing or leasing your car, gap insurance is worth keeping. It can save you from paying out of pocket if your car gets totaled or stolen.

“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 drop gap coverage once your loan balance exceeds your car’s actual cash value. Many insurers also drop this coverage after a certain 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.

Take time to shop around, compare prices, review cancellation policies and look for perks like deductible coverage. A few minutes of research could save you hundreds over the life of your loan or lease.

The bottom line

Gap insurance can be an affordable way to protect yourself from paying thousands out of pocket if your car is totaled or stolen. Rates vary by state, vehicle type, and personal factors, so it pays to shop around and compare quotes from multiple insurers.

Consider whether the age and value of your financed or leased car justify the added protection, and don’t hesitate to ask questions when reviewing policies – understanding the details now can save you a costly surprise 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.

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