Gap Insurance in New York (2024)

Gap insurance in New York isn’t required by law, but drivers leasing a vehicle may want to consider it.

Catherine Collins
Catherine Collins

Catherine leverages her background in education and finance to write articles that help readers make informed decisions about their insurance and finances.

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Katie Powers
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Katie PowersAuto and Life Insurance Editor
  • Licensed auto and home insurance agent

  • 3+ years experience in insurance and personal finance editing

Katie uses her knowledge and expertise as a licensed property and casualty agent in Massachusetts to help readers understand the complexities of insurance shopping.

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Updated August 11, 2023

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Gap insurance, which stands for guaranteed asset protection, is a type of coverage you can purchase for more protection if you finance your vehicle or have a lease on it. In the event of an auto accident, the policy can cover the difference between your remaining loan amount and the value of your car.

You typically need to purchase gap insurance when you lease a vehicle. This coverage can also benefit consumers who make a small down payment when purchasing a car or have to roll negative equity from an old car loan into a new car loan.[1]

Here’s what you need to know about buying gap insurance in New York.

Quick Facts
  • Adding gap insurance to an existing policy with collision and comprehensive coverage typically only increases your annual premium by about $20, according to the Insurance Information Institute.

  • You can either buy gap insurance from a dealership or an insurance company.[2]

  • You’ll likely need to provide a police report and your lease or loan documentation in order to file a gap insurance claim.

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What is gap insurance, and how does it work?

If you take out a loan to buy a car, you agree to repay your car loan over a certain period of time. You agree to the amount, interest rate, and terms of your loan. However, a car is a depreciating asset, so the actual cash value of your vehicle on the market decreases as you drive it.

Gap insurance can help you avoid having negative equity on a car loan, which is when you end up owing more money on your car than it’s actually worth.[3] You can face negative equity if you take out a loan lasting more than five years or don’t put a large enough down payment on a car.

If your car is a total loss in an accident, your car insurance company will value it based on its market value, not the amount of money you owe on your loan. This means you could get a check for your car that wouldn’t be enough to pay off your loan. This could put you in a situation where you have no car but still have an outstanding car loan.

You can prevent this from happening by purchasing gap insurance to fill in “the gap” between what you owe on your car and what it’s worth. That way, if you get into an accident and your car isn’t worth what you owe on it, gap insurance will cover the difference.

What does gap insurance cover in New York?

Gap insurance covers the difference between the current value of your car and what you owe on your car. It doesn’t cover any medical bills or car repairs following an accident.

The following scenario demonstrates how gap insurance works:

Let’s say you purchase a $30,000 car with a $27,000 loan and drive it for a year before you have an accident that totals your vehicle. You have collision coverage with a $500 deductible. By the time of your accident, your car has depreciated in value by about 20%, so it’s now worth $24,000. Your collision coverage will pay out $23,500.

You’ve made some payments on your auto loan but still owe $26,000 at the time of your accident. Gap insurance can cover the difference between what your vehicle is worth and your remaining loan balance. In this scenario, your policy would cover the $3,000 gap.

Gap insurance vs. full coverage

A full-coverage insurance policy typically includes liability, collision, comprehensive, and medical payments coverage. This policy type can kick in to cover damage to your car from an auto accident or non-collision incident, like vandalism, fire, severe weather, or a falling tree. It also covers medical care for injuries from the accident. It doesn’t include gap insurance.

Rather, gap insurance is a separate optional add-on policy you can get to cover the difference between the value of your car and your remaining loan balance if you total your vehicle.[4]

Good to Know

You might want to consider purchasing both full-coverage insurance and gap protection if you have an auto loan, made a low down payment on your car, or rolled over negative equity from a previously owned car.

Who needs gap insurance in New York?

New York law doesn’t require drivers to purchase gap insurance, but a financial institution or dealership might.[5] But some drivers should consider purchasing gap insurance for more financial protection.

You should consider purchasing gap insurance if you:

  • Took out a long-term car loan of more than 60 months

  • Made a small down payment

  • Rolled negative equity from an old vehicle loan into a new car loan

  • Have a lease and the auto lender requires it

  • Have a vehicle known for depreciating quickly

Drivers who made a large down payment or secured a car loan for 60 months or less don’t typically need gap insurance. However, drivers who are risk-averse and prefer buying additional coverage can benefit from the confidence and peace of mind gap insurance provides.

Dan Stous, a certified financial planner (CFP), explains that dealerships often try to get you to purchase add-on products that aren’t useful when you’re buying a new car. “Gap insurance is one of those products that is actually something to consider,” he says. Stous explains gap insurance can also benefit drivers without a lot of personal cash of their own.

How to buy gap insurance in New York

The most affordable way to buy gap insurance in New York is to call your insurance agent and add the coverage to your existing car insurance policy. You can purchase a stand-alone policy through a car dealership or a lender, but it’s typically cheaper to buy the coverage as an add-on with your car insurance company.

How much does gap insurance cost in New York?

The cost of gap insurance in New York will vary based on your driver profile, vehicle type, and insurer. Adding gap insurance to your policy typically costs between $20 and $40 annually, but it can cost more if you buy it separately through a dealership or lender.

You can see the average monthly cost of insurance for leased cars from New York insurers below.

Insurance CompanyAverage Cost for Leased Cars in New York
Travelers$208
Plymouth Rock$261
Midvale Home & Auto$295
Progressive$309
Liberty Mutual$479
Disclaimer: Table data sourced from real-time quotes from Insurify's 50-plus partner insurance providers. Actual quotes may vary based on the policy buyer's unique driver profile.

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Best gap insurance companies in New York

You have several options to choose from when buying gap insurance in New York. Here’s a list of the best insurance companies in New York that offer the coverage.

Allstate

Allstate has an Insurify Quality (IQ) Score of 4.1, meaning it’s a trusted insurance company with a solid rating. New York policyholders pay $591 per month for liability and $495 for full-coverage insurance.

The company offers gap insurance that consumers can use for new and used vehicles, as long as they add the coverage at the same time they finance their vehicle. The gap insurance policy from Allstate is flexible and available for vehicles financed for up to eight years or with $50,000 owed.

Liberty Mutual

Liberty Mutual offers gap insurance, but you can only buy it when you purchase your car, and you only qualify for the coverage if you’re the first owner of your car. The company has a slightly lower IQ Score of 3.8, and New York drivers pay $414 per month for liability and $463 for full-coverage insurance.

The company also offers a better car replacement add-on. If you total your vehicle in an accident, Liberty Mutual will give you money to purchase a car one year newer with 15,000 fewer miles on it.

Nationwide

Nationwide is a well-known, long-standing insurance company with an IQ Score of 4.1. Drivers with Nationwide coverage in New York pay $312 per month for full-coverage insurance. The company offers gap insurance that consumers can easily add to an existing collision insurance policy.

Progressive

Progressive offers an insurance add-on similar to gap insurance called loan/lease payoff coverage that you can add to an existing policy with comprehensive and collision coverages. Progressive has a 4.1 IQ Score. New York drivers pay $363 per month for liability and $471 for full coverage from Progressive.

Travelers

Travelers has a high 4.3 Insurify Quality (IQ) Score and offers some of the lowest average car insurance rates in New York. On average, drivers pay $163 for liability coverage and $198 for full coverage. The company offers a product called loan/lease gap coverage. If you total your vehicle, it covers the difference between the value of your car and what you still owe.

How Insurify rates car insurance companies

Data scientists at Insurify analyzed more than 40 million real-time auto insurance rates from our partner providers across the United States to compile the car insurance quotes, statistics, and data visualizations displayed on this page.

The car insurance data includes coverage analysis and details on drivers’ vehicles, driving records, and demographic information. Quotes for Allstate, Farmers, GEICO, State Farm, and USAA are estimates based on Quadrant Information Services’ database of auto insurance rates.

With this data, Insurify is able to offer drivers insight into how companies price their car insurance premiums. The data included on this page represent averages across ages, genders, credit scores, and driver profiles for New York drivers.

Gap insurance in New York FAQs

If you still have questions about gap insurance in New York, the following information should help you decide whether you should buy this coverage.

  • Does New York require gap insurance?

    No. New York law doesn’t require anyone to purchase gap insurance. However, some lenders or car dealerships might require you to purchase it if you finance or lease a new car.

  • How do you file a gap insurance claim in New York?

    In order to file a gap insurance claim in New York, you typically need to gather the following documentation:

    • Police report

    • Insurance settlement statement and check

    • Loan or lease contract

    • A sales receipt from your initial car purchase

    • Gap insurance documentation

    Once you’ve gathered the necessary materials, you need to contact the insurance company, dealership, or lender you used to purchase gap insurance. Follow the steps on its app or website to start a gap insurance claim. If you have questions about the process or can’t find the correct spot to file a claim, call the company and ask for help.

  • Do you need gap insurance if you have full coverage?

    If you have full-coverage car insurance, you still might benefit from also buying gap insurance in a few circumstances if you have an auto loan. For example, if you put a low down payment on your motor vehicle or rolled negative equity from an old loan into your new loan, gap insurance can allow you to pay off your car loan if you total your vehicle.

  • Is gap insurance standard in New York?

    No. New York doesn’t require drivers to purchase gap insurance, so it isn’t standard. Some insurance companies and dealerships might require it depending on your loan or lease and whether or not you get a new car.

Sources

  1. Insurance Information Institute. "What is gap insurance?." Accessed August 2, 2023
  2. What is GAP Insurance: Everything You Need to Know. "Kelley Blue Book." Accessed August 2, 2023
  3. Consumer Financial Protection Bureau. "What is negative equity in an auto loan?." Accessed August 2, 2023
  4. Insurance Information Institute. "What is covered by a basic auto insurance policy?." Accessed August 2, 2023
  5. New York State Department of Financial Services. "Gap Waivers and Gap Insurance." Accessed August 2, 2023
Catherine Collins
Catherine Collins

Catherine Collins is a freelance financial writer and author based in Detroit. She's the co-founder of MillennialHomeowner.com and MomsGotMoney.com, and author of the book Mom’s Got Money: A millennial mom’s guide to managing money like a boss. She has written for US News, Huffington Post, Money, Business Insider, Investopedia, Entrepreneur, Go Banking Rates, and many other publications. She currently resides in Detroit, Michigan with her boy-girl twins and a rescue dog named Julep.

Katie Powers
Edited byKatie PowersAuto and Life Insurance Editor
Photo of an Insurify author
Katie PowersAuto and Life Insurance Editor
  • Licensed auto and home insurance agent

  • 3+ years experience in insurance and personal finance editing

Katie uses her knowledge and expertise as a licensed property and casualty agent in Massachusetts to help readers understand the complexities of insurance shopping.

Featured in

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