pays off your loan if your car is totaled and you owe more than it is worth.
You can buy gap insurance (or loan-lease payoff coverage) through your lender. It’s also available through stand-alone gap providers and many insurance companies. It is typically cheapest through your insurance company, though not all offer it. Expect to pay 5 to 6 percent of your premium for comprehensive and collision; if your comp and collision cost $1,000 a year, expect gap insurance to cost about $50 to $60.
You must buy comprehensive and collision coverage to also buy gap insurance. The car must be a total loss, and you must pay your deductible before gap insurance pays the difference on loan.
Once your car is worth more than you owe on it, gap insurance is pointless. We recommend you buy gap insurance if you have a loan longer than 48 months or made a down payment of less than 20 percent.
Uninsured motorist bodily injury – it’s usually called simply uninsured motorist – pays your medical expenses if you are injured by an uninsured driver. Even if you have health insurance that might pay for your hospital bills, the uninsured motorist will pay the bills for your passengers who aren’t covered by health insurance. It also can cover lost wages and pain and suffering.
Uninsured motorist property damage pays for repairing damage to your car if you are hit by an uninsured motorist. If you also carry collision, it will pay your deductible. If you don’t have a collision, it will pay some predetermined amount toward your repairs -- it can vary by state, from as much as $25,000 to as little as $3,500 – and sometimes has a deductible attached. It does not cover hit-and-run accident damage.
Some states require one or both of these coverages. See states that require it using the link below.
Typically your uninsured motorist bodily injury coverage limits cannot be greater than the amount of liability insurance you have.
We recommend buying uninsured motorist coverage, both bodily injury, and property damage. The cost is about 5% of your current insurance premium. We strongly recommend buying bodily injury matching your liability coverage if you are not covered by health insurance. We also recommend buying property damage if you do not carry collision coverage.
Personal injury protection and medical payments
Personal injury protection and medical payments pay for the costs of treating injuries that you, authorized drivers or your passengers suffer in a car accident when you are at fault.
Personal injury protection is required in the 12 “no-fault” states where each driver’s insurance coverage pays for his injuries no matter who is to blame for the accident. Delaware and Oregon also require it.
Medical payments coverage is mandatory only in Maine and for insured drivers in New Hampshire, where insurance coverage is not compulsory.
If personal injury protection or medical payments is optional in your state and you have health insurance already, we recommend that you buy enough to cover your deductible. If you do not have health insurance, we strongly recommend you buy at least $10,000 in personal injury protection or $5,000 in medical payments coverage.