Does Gap Insurance Cover Hail Damage?

Hail storms can cause extensive damage to vehicles, leaving car owners stuck with expensive repair bills. If your car has been damaged by hail, you might wonder if gap insurance will help pay for repairs.

Unfortunately, gap insurance does not cover hail damage. However, there are other types of car insurance that may provide coverage, depending on your policy.

What is Gap Insurance?

Gap insurance is an optional add-on coverage that you can purchase when financing or leasing a new car. It covers the “gap” between what your car insurance will pay if your vehicle is totaled or stolen and what you still owe on your car loan.

For example, say you purchase a new car for $20,000 and finance it over 5 years. After 2 years, your car is totaled in an accident and your insurance company determines its actual cash value to be $12,000. However, you still owe $14,000 on your car loan. Gap insurance would pay the $2,000 difference so you don’t end up owing money on a car you no longer have.

Gap insurance only covers situations when your vehicle is considered a total loss – meaning the repair costs exceed the vehicle’s value. It does not cover partial losses or damage repairs.

What Types of Car Insurance Cover Hail Damage?

Hail damage would fall under the “comprehensive” portion of your auto insurance policy. Comprehensive coverage pays for damage to your vehicle that is not caused by a collision, including:

• Hail damage
• Flood damage
• Fire damage
• Vandalism
• Falling objects
• Theft

Nearly all auto insurance policies include some level of liability coverage, which pays for damage you cause to others. Collision coverage is also common and pays for damage to your car from accidents.

Comprehensive coverage is optional but highly recommended since it protects against many types of damage. If you opted not to purchase comprehensive coverage, you would be fully responsible for any hail damage costs.

How Does the Claims Process Work for Hail Damage?

If a hail storm damages your vehicle, you’ll need to start by filing a claim with your insurance company. Here are the steps involved:

• Report the claim – Call your insurance company or agent as soon as possible after the hail storm. Provide details about when and where the damage occurred.

• Inspection – An insurance adjuster will examine your car and assess the damage. They may ask you questions about the condition of the car before the storm.

• Estimate repair costs – Based on the adjuster’s inspection, your insurance company will determine whether to repair or total your vehicle. If repairable, they will estimate repair costs.

• Settle the claim – The insurance company will issue payment to you or the auto repair shop, minus your deductible. If your car is totaled, they will pay the actual cash value.

• Get repairs – Take your car to an auto repair shop approved by your insurance company to get the damage fixed, or shop for a replacement vehicle if totaled.

Your auto insurance will pay the full cost of covered hail repairs, minus any applicable deductible. So if you have a $500 deductible and the repairs cost $2,000, you would pay $500 out of pocket while your insurer covers the remaining $1,500.

Does Gap Insurance Ever Cover Hail Damage?

The only scenario where gap insurance would assist with hail damage repairs is if the damage was severe enough to total your vehicle.

For example, say you owed $18,000 on your car loan when a massive hail storm completely totaled your car. The insurance company determines the actual cash value to be $15,000 due to its age and condition before the storm.

Gap insurance would kick in to pay the $3,000 difference between the value and your remaining loan balance. This releases you from the loan obligation so you can use the $15,000 insurance settlement to purchase another car.

However, for most minor or moderate hail damage, your car will be repairable rather than totaled. In these cases, gap insurance will not provide any assistance, since it only covers total losses. Your comprehensive auto insurance would pay for repairs.

Do You Need Gap Insurance?

Gap insurance can be a smart purchase if you have a new vehicle that’s likely to depreciate quickly. It protects against losing money if your vehicle gets stolen or totaled.

However, gap insurance premiums add to the total cost of your loan. It may not be worth the expense if you:

• Put at least 20% down on the vehicle
• Financed your car for a short term (3 years or less)
• Purchased a vehicle that holds its value well, like a truck or SUV

Before deciding, consider the length of your loan, your down payment amount, and the car’s resale value. Your auto insurance agent can also help assess whether gap insurance makes sense for your situation.

Alternatives for Covering Repair Costs

If you don’t have comprehensive coverage or want to avoid a rate increase after filing a hail damage claim, here are some other options for covering repair costs:

• Use savings – Pay out of pocket if damage is minor and affordable. Maintain an emergency fund for more extensive repairs.

• Borrow money – Take out a personal loan if repairs are needed before you can save up. Compare rates and terms from banks, credit unions, and online lenders.

• Credit card – Charge the repairs to a credit card temporarily if you can pay it off within a few months. Avoid high-interest rate cards and fees.

• Buy aftermarket protection – Some companies like Endurance and Carchex offer extended warranty policies that include hail protection.

• Negotiate with body shop – Ask for a discounted rate, waived fee, or interest-free payment plan from auto repair shops.

The best option is comprehensive insurance to safeguard your investment. But if you need to cover repairs another way, shop around to find the most affordable financing.

Frequently Asked Questions about Gap Insurance and Hail Damage

Does gap insurance cover repairs or only total losses?

Gap insurance strictly covers total losses from theft or accidents. It does not cover any repairs, even those caused by hail storms. Comprehensive auto insurance pays for hail damage repairs.

What if hail totals my car and I have a loan – will gap insurance help?

Yes, in the rare case when hail damage exceeds your car’s value and it’s declared a total loss, gap insurance will pay the difference between its value and your remaining loan balance. This allows you to settle the loan and use any insurance payout toward a replacement car.

Can I get gap insurance to protect my older paid-off car from hail damage?

No, gap insurance only applies to financed vehicles and the gap between vehicle value and a loan payout. It does not actually provide any coverage for hail damage or repairs. Comprehensive auto insurance is what covers hail damage regardless of whether a car is paid off.

Does a higher gap insurance deductible lower my premiums?

Gap insurance does not have a deductible. The deductible that applies to hail damage is based on your comprehensive auto insurance, not gap coverage. Picking a higher deductible for your auto policy can potentially lower your overall premiums.

If I lease my vehicle, am I required to buy gap insurance?

Leased vehicles often have gap insurance requirements, so check your lease terms. Even if it’s not required, gap insurance can be beneficial for leased cars since the loan amount is based on vehicle value at the start of the lease, when cars tend to depreciate quickly.

The Bottom Line

Gap insurance does not directly cover any repairs, including those caused by hail storms. Comprehensive auto insurance protects against hail damage, covering both repairs for partial losses and total losses.

Gap insurance only assists if hail damage exceeds your car’s current value and it’s declared a total loss. In this scenario, gap insurance will pay the difference between the vehicle’s value and your remaining loan balance.

To fully protect your vehicle from hail damage costs, comprehensive coverage is a must. Carefully weigh the benefits before paying extra for gap insurance.