Auto Insurance

Auto Insurance Coverage

In a survey of 46 states, the District of Columbia and nearly nine million auto insurance quotes provided by its customers, Insurance.com found an overall decline in the 2005 national average for auto insurance rates, resulting in a rate fall for over 21 states. That’s a 2% decline from 2004, saving many households an average of $60 per year.

Due to the sharp decline in value immediately following purchase, there is generally a period in which the remaining car payments exceed the compensation the insurer will pay for a "totaled" (destroyed, or written-off) vehicle. So-called GAP insurance was established in the early 1980's to provide protection to consumers based upon buying and market trends.

The escalating price of cars, extended term auto loans, and the increasing popularity of leasing gave birth to GAP protection. GAP waivers provide protection for consumers when a "gap" exists between the actual value of their vehicle and the amount of money owed to the bank or leasing company. In some countries including New Zealand and Australia market structures mean that people are more likely to buy a nearly new car than a new car so this is less of a problem.