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Gap Insurance

Written by Todd Clay. Posted in Definitions, Research Last Updated: 03/23/2011

What is Gap Insurance, how much does it cost, and do you really need it?

Bridging the Gap of Depreciation with Gap Insurance - The 360 Bridge - Austin, Texas

Bridging the Gap of Depreciation with Gap Insurance The 360 Bridge - Austin, Texas

Gap Insurance is unlike any other consumer insurance policy. Why? Because it covers the part of your car that only banks would think about: depreciation. That’s the part that goes down every month you own your vehicle. Still confused? Let me explain.

What is Gap Insurance?

You’ve probably heard it said, “once you drive a new car off the lot, it’s worth thousands of dollars less.” It’s true. Say you visit your local Nissan dealership. That new Altima is screaming your name, so you buy it. After handing over your down payment, the salesguy hands you the keys to your new ride. You just bought a $22K vehicle, but once you’re home, you could only sell it for $18,000. That missing $4,000 ($22,000 – $18,000) is the depreciation you incur by merely relocating the vehicle.

Unfortunately, a regular auto insurance policy does not cover a car’s depreciation. If, on the second day of owning your Altima you total your car, the insurance company would only pay you the actual cash value (ACV) for the car, or $18,000. But the bank still wants all the money you borrowed. Where are you going to come up the extra $4K? That’s why you need gap insurance, also called loan/lease gap coverage. If you want to cover the depreciation of your vehicle for the life of the vehicle, then get gap insurance. It sometimes even pays for your deductible.

How Much Does It Cost?

Since you’re not paying to insure your entire vehicle, a gap insurance policy is not as expensive as regular car insurance. However, since the policy is basically all-risk coverage, it’s not exactly cheap either. If you shop around, you can pay a one-time premium of $300 to $700. The price depends on the amount financed and sometimes the terms of the loan or lease. There are caps involved, but most new vehicles are eligible for gap insurance. Check with your finance company for an easy quote.

Do You Really Need Gap Insurance?

There are a couple of reasons why you might want gap insurance. For one, if you owe a significant amount on the car you should consider it. How much money? Dave Hurt, who sells gap insurance with Car Select, says, “Anyone who buys a car and finances 80% of the purchase price should buy Gap Insurance.” That’s probably a good guideline.

Second, you should consider gap insurance if it’s early in the life of your loan or lease. If you owe more money than your car is worth, you’re considered ‘upside down’. Gap insurance could ease you out of an ‘upside down’ situation if you total your car. It may not be required by your finance company, but it’s not a bad decision in certain circumstances.

It’s worth mentioning that gap insurance is not for every car. If you have an older vehicle, gap insurance may not be available for it. Check with the company who writes the gap insurance policy if you’re curious about your particular vehicle.

Finally, check to see if your finance company already includes gap insurance with the auto loan. When I worked with State Farm, their bank automatically included a gap insurance policy for new car purchases. True, their auto loan rates could be higher than dealer financing, but it was an added benefit of their auto loans.

If you have an experience with gap insurance, feel free to leave a comment.

How to Shop for Car Insurance

Written by Todd Clay. Posted in Research Last Updated: 04/10/2012

4 Easy Steps to Getting the Best Rate With The Best Company Every Time

How to Save Hundreds When Shopping for Auto Insurance.

How to Save Hundreds When Buying Auto Insurance.

Finding out how to shop for car insurance isn’t hard. But if you do it wrong, you could waste time, get frustrated, or worse, lose money. When I say a lose money, I’m talking thousands of dollars a year. It’s worth taking some time to learn the process. If you do, you’ll shop smarter, save some cash, and get peace of mind knowing you did it right.

Stop Wasting Good Money

In case you don’t think it’s worth your time, consider a normal driver in Texas. (Your state will be different, but the example still applies.) The Texas Department of Insurance publishes auto rates from all the insurers in the state. In 2008, a married 35-yr old driver in Dallas County with no accidents or tickets could pay anywhere between $243 and $1128 for a 6 month policy. The same driver with the same coverage could pay $1770 more per year because they didn’t shop their car insurance – almost two grand! Unfortunately, this is not uncommon.

That’s why it’s so important to make sure you’re getting a good deal. You may love your agent, but think about this: Your agent gets a commission from every extra dollar you waste with their company. If you don’t look out for yourself, your agent won’t do it for you. That money is yours – don’t just give it away. Here’s what you need to do.

Step 1: Pick Some Car Insurance Companies

Not every auto insurance company is worth your business. You need to find a few other companies to compare. How do you get a list of companies?

Ask around. Ask your friends who insures their cars. They’ll let you know if they’ve had a good or bad experience. Don’t want to ask around? Then check out some customer reviews. Collect a list of some auto insurance companies you want a quote from. I suggest you pick at least 3, but preferably 7 companies to compare. That way you get a healthy sample for the best possible savings.

Step 2: Narrow Your Choices

Once you have your list, check two other things. First off, financial strength. Various ratings agencies measure the financial stability of insurance companies. A.M. Best and Standard and Poor’s are the most prominent agencies. You can look up each company’s financial rating at your state’s department of insurance.

Second, ask the question: do those companies advertise? Companies that advertise are typically growth-oriented companies. This is a positive trait since you don’t want to send your premium dollars to a company that isn’t motivated to gain your business – how will they treat you when you have a claim. If you haven’t heard of one of the companies on your list, then it may not be a good fit.

Step 3: Getting Online Quotes

Go online for auto insurance quotes. Why? Because it takes too much time driving around, sitting in offices, or even jabbing on the phone with salespeople. The process takes long enough without any unnecessary steps.

The quickest way to get multiple quotes is to use a ‘quote aggregator’. It takes a few minutes to fill out a questionnaire. At the end, you can see quotes from several car insurance companies, and you’ve only filled out one form. I’ve included a link to make it easy for you: Online Quote Aggregator

After that, grab quotes from the remaining the companies on your list. Use a search engine to find the company websites. Auto insurance quote instructions should be very prominent at those sites.

Step 4: Confirm Online Quote Over the Phone

Now you have some quotes, it’s time to confirm the price. For your best auto insurance quotes, make a couple of phone calls to the general company number. Again, a search engine is helpful here. You can also call a local agency if that makes sense. Tell them about your online quote. If they can’t access it, answer the questions again.

There’s no reason to make 5 phone calls. You’ve already narrowed down the companies using the previous steps above. If you’re happy with the first quote on the phone, then buy the policy. Make sure it’s in effect before cancelling your current policy. Chances are you saved enough money to pay yourself a few hundred bucks for your time. After all, where else can you pick up an extra few hundred to a thousand bucks for a couple hours of work?

If these steps helped you shop for car insurance, leave a comment to help others in their search for a cheaper company.

Insurance Calculators

Written by Todd Clay. Posted in Related Stuff Last Updated: 11/20/2008

AmPm Insure

AmPm Insure

I’m a member of an insurance forum called AmPmInsure. The forum members are all very knowledgeable about the various aspects of insurance including car insurance. I even learn from the contributors. There’s a lot to know in this business.

One of managers at the forum asked if our readers might be able to use a few insurance calculators. Even though they don’t directly relate to auto insurance, I thought someone might find them helpful.

Here’s the list:

1) Life Insurance Calculator

2) Disability Insurance Calculator

3) Home Insurance Premium Savings Calculator

4) Sports Injury Calculator

5) Body Mass Index Calculator (for Health Insurance)

To see these calculators on their website, check out:
AmPm Insurance Calculators

Cheapest Car Insurance in Pennsylvania*

Written by Todd Clay. Posted in Rates Last Updated: 08/24/2009

Looking for the cheapest car insurance in Pennsylvania? Check out these auto insurance companies according to our independent research in the Keystone State.

Finding the Best Rates in the Keystone State

Finding the Best Rates in the Keystone State

Looking for the cheapest car insurance in Pennsylvania?

It could be difficult – especially if you had to call every company in the state. Getting quotes from 30+ carriers would be a pain. But don’t worry. We’ve done all the hard work for you.

Our sample rates give you a good idea of what companies charge, compared to each other, in the Keystone State. The list compiles 20 cheap car insurance companies. Notice I didn’t say ‘best’, I just said cheap.

Every driver is different. What you see below is a sample of male and female drivers throughout the state. Quotes listed are for more than the minimum auto insurance package required by law in Pennsylvania. In other words, if you get minimum liability limits from these companies, you might pay less money than what’s listed below.

Also, prices listed are NOT the same as the price you will receive from the companies below. These are NOT actual quotes from insurers. This list should serve as a general guide to help you shop – to help narrow your choices when shopping for car insurance in Pennsylvania.

*NOT an exhaustive list of PA insurance companies. Companies listed are those with the largest market share, according to the Pennsylvania Department of Insurance.


Pennsylvania Auto Insurance Companies

Average Premium





Travelers Home and Marine Ins. Co.



Erie Ins. Exchange



Nationwide Mutual Ins. Co.



Donegal Mutual Ins. Co.



Allstate Fire and Casualty Ins Co.



State Farm Mutual Automobile Ins. Co.



Pennsylvania National Mutual Casualty Co.



Westfield Ins. Company



State Farm Fire & Casualty Co.



Progressive Direct Ins. Co.



Erie Ins. Company



Harleysville Preferred Ins. Co.



Progressive Specialty Ins. Co.



Farmers New Century Ins. Co.



Assigned Risk Plan – Clean



Assigned Risk Plan – Other Than Clean



American Independent Ins. Co.



First Liberty Ins. Corp.



Liberty Mutual Fire Ins. Co.



*NOT an exhaustive list of PA car insurance companies. Companies listed are those with the largest market share, according to the Pennsylvania Department of Insurance.

Rates collected in 2008.
All data is courtesy of the Pennsylvania Department of Insurance.
For more information, view our Disclosure.

Cheapest Car Insurance in Ohio

Written by Todd Clay. Posted in Rates Last Updated: 11/08/2008

Looking for the cheapest auto insurance in Ohio?  Check out the 25 cheapest insurers from our independent research in the Buckeye State.

Crusin' for Cheap Car Insurance in Ohio?

Crusin' for Cheap Car Insurance in Ohio

Looking for cheapest car insurance in Ohio?

Getting quotes from 50+ car insurance carriers would be a waste of a good weekend.  But don’t worry.  We’ve laid the groundwork for you. Our sample rates from Ohio give you a good idea of what insurers charge their customers.  The list compiles 25 cheap car insurance companies.  Notice how I didn’t say ‘best’, I just said cheap.

Every driver is different.  What you see below is a sample of male and female drivers throughout the state, ages 19-70.  Quotes listed are for more than the minimum car insurance package required by law in Ohio.  In other words, if you get minimum liability limits from these companies, you might pay less money than listed below.

Prices listed are NOT the same as the price you will receive from the companies below. In addition, these are NOT actual quotes.  This list should serve as a general guide to help you shop for car insurance in Ohio.


Car Insurance Companies in Ohio

Average Premium


Kansas City Fire & Marine



Selective of the Southeast



Montgomery Ward



Lightning Rod Mutual



California Casualty Indemnity Exchange









Allstate Property and Casualty



Travelers P&C



USAA Casualty



Travelers Casualty



Atlantic Mutual






Cincinnati Casualty



GEICO General



Government Employees



State Farm Mutual



Travelers Commercial






State Farm Fire & Casualty






Horace Mann Property Casualty






Progressive Casualty



Amica Mutual


Rates published in April 2008.
All data is courtesy of the Ohio Department of Insurance.
For more information, view our Disclosure.

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Car Insurance Guidebook Unravels the Car Insurance Mystery

Unless you work in the car insurance industry, the topic is probably a mystery to you. The words deductible, comprehensive, collision, liability, premium, loss of use and bodily injury are all gibberish when they reach your ears.

Unfortunately, insurance is something that you are required to have by law if you want to drive. Because of how confusing it is many people go around in almost an insurance daze while they get car insurance quotes from the auto insurance companies that they have heard of. In reality, they are completely lost as to what they are actually buying.

Instead of looking at what each insurance company offers in the terms of protection for both themselves and their car, they are instead looking for cheap car insurance. Finding the cheapest car insurance coverage makes having to buy the required product all that much less painful, but misses the whole point of having insurance.

Learning about insurance through your insurance agent or websites like Car Insurance Guidebook will give you the upper hand when you looking for car insurance. You can take your knowledge and not only find the best price for insurance, you can use it to find really great insurance to protect you and your assets. Then you aren’t stuck settling for just average car insurance that can hurt you financially if you ever need it because there isn’t enough protection.

For example, when looking for insurance the car insurance rates are just the first of many factors that need to be taken into account when you are shopping around for car insurance. You also need to take into account the type of vehicle that you are driving. Many people don’t know this.

Are you driving around a vehicle that is a new sedan and can be protected under any blanket insurance policy? Or do you have an old car that you fixed up that needs special protection and could be better covered under classic car insurance?

Don’t just assume that when you compare car insurance that it will be a one-size-fits-all policy. This is where the insurance knowledge will come in handy; you will know what you need to protect yourself and your vehicle.

You will understand what your insurance agent is talking about when they use insurance terms and you will actually be able to make an informed decision. This is much better for you instead of the “nod and smile” approach people take in their insurance agent’s office.

Also just like your life changes your insurance needs will change. This year you may just need to learn about the best deductible to have. Next year you may need to educate yourself on car insurance for young drivers. As the years pass, motorcycle insurance may be something you will need to know.

Many wise people say that you never stop learning, so take their advice and educate yourself on the insurance that you spend a lot of money on and can’t get away with not having.