Leslie Kasperowicz holds a BA in Social Sciences from the University of Winnipeg. She spent several years as a Farmers Insurance CSR, gaining a solid understanding of insurance products including home, life, auto, and commercial and working directly with insurance customers to understand their needs. She has since used that knowledge in her more than ten years as a writer, largely in the insuranc...

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Melanie Musson is the fourth generation in her family to work in the insurance industry. She grew up with insurance talk as part of her everyday conversation and has studied to gain an in-depth knowledge of state-specific insurance laws and dynamics as well as a broad understanding of how insurance fits into every person’s life, from budgets to coverage levels. Through her years working in th...

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Reviewed by Melanie Musson
Published Insurance Expert Melanie Musson

UPDATED: Mar 23, 2022

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Just What's Essential

  • GAP coverage protects you when your car is totaled or stolen and your insurance does not cover the full cost of your loan
  • Not all major insurers offer GAP protection, but some offer an equivalent
  • If you lease your vehicle, you may already have coverage per your contract

GAP insurance covers the difference between what you owe on a vehicle and what your insurer says it is worth when you suffer a total loss. It is a special protection that supplements liability, comprehensive, and collision coverage, ensuring that you are not left paying the loan deficiency.

If you’re wondering what GAP insurance is, read on to learn more about what GAP insurance covers and how to get it.

How much is GAP insurance typically?

GAP coverage costs about 6% of your combined collision and comprehensive insurance, or approximately $5 per month. Your insurer will, however, look at a few other matters before offering a quote. These include the actual cash value (ACV) of the vehicle, where you live, and previous insurance claims.

Your dealer may also offer GAP coverage for a flat fee, usually between $500 to $700. However, this means working with a third party to settle your claim instead of your usual insurer.

Furthermore, you may only need GAP coverage for a few years or until the outstanding loan balance drops beneath what the vehicle is worth. In that case, paying for the coverage as you need it may save you money in the long run.

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Which companies provide GAP insurance?

GAP coverage is offered by many auto insurance companies. Although it’s not part of the full coverage car insurance new vehicle owners usually seek, it is usually readily available. And if you lease a vehicle, lease GAP insurance is often included within the lease agreement.

Insurers offering GAP insurance include:

  • Progressive
  • Liberty Mutual
  • Allstate
  • Travelers
  • Nationwide
  • American Family

While some insurers don’t expressly offer GAP coverage, some supply payoff protection as part of their standard insurance. Ensure that whatever coverage you have offers sufficient protection to pay the difference between the insurer’s settlement and the outstanding balance on your loan.

Can I get GAP insurance by itself?

You can buy gap insurance coverage on its own or you can obtain it from your insurance company. Generally, you’ll get the best value with your insurer as they will bundle it with all your other coverages, including liability, collision, and comprehensive.

It’s also convenient to keep all your coverage together when it comes time to file a claim. Holding separate policies may slow the process and require you to continue to make loan payments until your case is closed.

How can GAP insurance help you save money on car repairs?

GAP coverage does not extend to car repairs. Instead, consumers should rely on their auto insurance claim settlement to cover those costs.

GAP only kicks in when a vehicle is totaled, which means repair costs are moot. Even if you’re able to obtain the salvaged vehicle, any repairs would not be covered.

Is GAP insurance worth it on a new car?

In many cases, choosing car GAP insurance is a solid decision as it covers the negative equity caused by not putting enough money down on a vehicle or choosing a loan longer than 60 months.

If your loan is shorter than 48 months, you are not likely to need GAP coverage. You also don’t need GAP insurance if you pay for your car in full or put a significant amount down.

However, it could prove beneficial to get GAP insurance if you purchased a new vehicle with a small down payment, a long-term loan, or a high interest rate. In this case, the vehicle’s actual cash value (as determined by the insurer) could quickly become less than what you owe on the loan.

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Getting GAP Coverage

GAP insurance is the coverage you need when your vehicle is new or leased and your loan balance is high. It can save you a bundle of cash if your vehicle is totaled. The monthly cost rivals what you pay for just one large caramel Frappuccino, so it’s often worth the peace of mind.