Does Travelers offer gap insurance for car insurance?

Does Travelers offer gap insurance for car insurance? Suppose you get into a car accident, and your vehicle is totaled. Under collision coverage, you get the car’s cash value less your deductible amount as a settlement from Travelers.

If you have a car loan or the car is leased, the settlement from Travelers goes to that company to pay off the loan or leasing contract. Compare Travelers insurance rates in our Travelers insurance review.

A gap may occur if the amount needed to pay off the contract is more than the money paid by Travelers. In this circumstance, if you have gap insurance, it pays the amount of the difference. Keep reading to find out if you need Travelers gap insurance coverage.

Travelers Loan/Lease Gap Insurance for Car Insurance

The decision to accept or decline loan/lease gap insurance depends on whether the lender or the leasing company requires you to carry the insurance under your loan or lease agreement.

Even if the lender or the leasing company does not require this coverage, you may still want to get it to reduce the possibility of paying a large amount out of pocket if your car gets totaled in an accident or stolen.

Filling the Gap for Collision or Comprehensive Coverage

Collision insurance covers vehicle or property damage if you hit something. Comprehensive coverage is for things that do not involve a collision, such as theft, fire, vandalism, or weather damage. A lender or leasing company requires both for full coverage of the vehicle.

Explore the differences in our expert guide to collision vs. comprehensive coverage.

To better understand how loan/lease gap insurance works, compare an accident where your car is totaled versus your car being stolen. A totaled car is one where the repairs cost more than the vehicle’s actual cash value (ACV).

The insurance adjuster will examine the damages to your car and then estimate the car’s value. If the estimated repairs exceed the ACV, the insurance company only pays the cash value less your deductible. If you have a loan or lease that is a higher amount, the loan/lease gap insurance pays the difference.

Suppose your car is stolen and not recovered in a reasonable timeframe. If you have comprehensive coverage with a high enough limit, Travelers pays the vehicle’s cash value less your deductible.

Again, if you have a loan or lease more than this cash value, the loan/lease gap insurance pays the difference less the deductible.

Travelers Gap Insurance Deductibles

For a vehicle you lease or finance, it is best to have full coverage car insurance from Travelers and loan/lease gap insurance to cover the difference between the vehicle’s ACV and the amount due on the loan or lease.

Loan/lease gap insurance does not cover your deductible, so you must pay that amount to the lender or leasing company if your car is totaled or stolen.

Review our expert guide to car insurance deductibles to set an appropriate deductible for your gap insurance.

Travelers Gap Insurance vs. Actual Cash Value (ACV)

Be aware that the actual cash value of your car declines over time, depending on how much use it gets, its condition, and its maintenance. It is a good idea to ensure you are fully covered and don’t end up paying out of pocket for the difference between your outstanding amount owed and the car’s cash value.