- Gap (guaranteed asset protection) insurance is required for most leased vehicles.
- The top seven companies we found for gap insurance are Progressive, Allstate, Esurance, Liberty Mutual, Nationwide, American Family Insurance, and Travelers.
- While drivers can buy gap insurance from a dealership, it will often be cheaper to purchase gap coverage from an insurance company as a policy add-on.
When your car is totaled or stolen, gap insurance can save the day.
Something you might not know: you don’t have to buy gap insurance from the car dealership. Plus, depending on the terms of your loan, your down payment, and the vehicle’s depreciation rate, having full coverage doesn’t mean you’re fully protected. In less than two minutes, Insurify can help you compare car insurance rates and coverage at a price you can afford.
How much does gap insurance cost?
Is gap insurance worth it? It can be a no-brainer if you owe a lot more than what the car’s worth. And you don’t have to break the bank either. Below are the ten cheapest car insurance policies for gap insurance.
|Insurance Provider||Monthly Gap Insurance Quote|
Stand-alone companies and dealerships make you pay up front, and the dealership could roll gap insurance into your loan, meaning it will cost interest, too. It’s often cheapest for the consumer to get gap and car insurance from the same company.
But it’s not too late to save if you signed up at the dealership. You can often cancel the policy and get a refund for any unused premium. Just make sure you get a new policy before canceling the old one.
What is gap insurance?
“Gap” is an acronym for “guaranteed asset protection”. Gap insurance protects you if your car is totaled or stolen by paying the difference between the car’s actual cash value (ACV) and how much is left on your loan. It picks up the “gap” between what your collision insurance covers and what you still owe the bank.
How does gap insurance work?
Imagine you bought a brand-new car that cost $25,000, and you now owe $20,000. If your vehicle is totaled or stolen, the actual cash value may be $15,000. You pay your $500 deductible, and the insurance gives you a $14,500 payout. This amount goes to paying the amount you owe on your car. You still owe a $5,500 loan balance covered by gap insurance.
Gap insurance is an add-on or optional coverage in addition to your traditional auto insurance policy, but the lender may require it if you lease your vehicle. Only rarely do gap insurance companies cover your deductible. And the coverage works regardless of fault in an accident.
Gap insurance covers:
- Negative equity (or being upside down)—the difference between what the car’s worth and the loan amount you owe to the bank
- Theft of your insured vehicle
Gap insurance does not cover:
- Bodily injury of yourself or another driver
- Damage to a non-totaled vehicle—comprehensive coverage and collision coverage on your auto policy cover this
- Engine failure of your vehicle
How long does gap insurance last? The best answer is until you cancel it. You can remove it once you owe less than what the vehicle’s worth.
Do I need gap insurance?
When you drive off the lot, your new vehicle takes a 10 percent depreciation hit, and after two years, the value of your vehicle goes down by nearly a third. Without gap insurance, you could take a sizable risk. You should consider gap insurance coverage if you have:
- A lender who requires it
- A leased vehicle
- A car loan term of 60 months or longer
- Less than 20 percent down or no down payment at all
- A high-interest rate loan
- Negative equity rolled over from your last auto loan
- A luxury or high-value vehicle, because they depreciate faster than average
How to Pick a Gap Insurance Company
Which insurance companies offer gap insurance?
Many insurance companies offer guaranteed asset protection (often referred to as gap) insurance. Gap insurance provides protection when a drivers’ car is stolen or totaled, and many lenders will require this type of coverage.
When selecting a company to buy gap insurance from, ask:
- Does the auto insurer cover the deductible? Typical deductibles are $500 or $1,000. Rarely, you’ll find a company like Allstate who covers the deductible too, but most don’t.
- Is the insurer reputable? If you’re thinking about a stand-alone company, it’s a smart idea to check BBB ratings and online reviews.
- Can you cancel later? You’ll only need it until you owe less than what the car’s worth. Bring up any questions about the cancellation policy and refunds before you sign up.
- How much is it? It’s hard to know until you get a quote, but you can use a true quote comparison site like Insurify to compare 10+ quotes in a few minutes.
Top 7 Companies for Gap Insurance in 2022
Here are the top seven companies for gap insurance ranked by their total number of car insurance policies, as reported by the Insurance Information Institute. All have similarly excellent customer satisfaction rankings with J. D. Power. Your gap coverage will be an endorsement to your regular car insurance, and you can cancel at any time.
Do you have an insurance company that doesn’t offer gap insurance? You can compare prices for car insurance coverage from insurance providers in a flash with Insurify.
Check out the top seven providers for gap insurance with two honorable mentions:
Progressive calls it “loan/lease payoff,” but what they offer is indeed gap insurance. It covers up to 25 percent of the actual cash value of your car.
2. Allstate and 3. Esurance
Allstate owns Esurance, so they’re listed together. Both protect new and used vehicles financed or valued up to $100,000. Your gap insurance will cover any amount owed that’s $50,000 or less. These two are the only ones reviewed that will pay your deductible up to $1,000.
4. Liberty Mutual
Liberty Mutual requires you to buy gap insurance at the same time as the car, and you must be the car’s first owner. So that means used cars would not qualify. They also don’t offer gap insurance in every state, but you’ll know for sure when you get your quote.
Nationwide’s gap insurance policy will be “on your side” in case of a total loss or a stolen car. You still must pay the deductible, but Nationwide will fill in the gap.
6. American Family Insurance
At American Family, they call gap insurance “loan or lease assistance coverage” or “lease/loan gap insurance.” American Family’s gap insurance limits pay up 25 percent of the actual cash value of the vehicle.
Travelers calls their coverage “loan/lease gap insurance.” You must be the vehicle’s original owner, and you must buy the car from a new car dealer to be eligible for the coverage.
Honorable Mentions: State Farm and USAA
State Farm doesn’t offer gap insurance, but they have a feature (at no added cost) called Payoff Protector that applies if you get a loan from one of its banks. It functions just like gap insurance if you have full-coverage car insurance. And the full auto coverage doesn’t have to be with State Farm to qualify.
USAA doesn’t offer gap insurance through its insurance company, but like State Farm, if you get your loan from a USAA bank, you can buy a product called Total Loss Protection that is essentially gap insurance.
The Best and Cheapest Gap Insurance Quotes
Fall into the gap, well gap insurance that is. And while you’re protecting the difference between the car’s value and what you owe the lender, why not get the right car insurance, too?
You can use Insurify to compare the best gap and car insurance rates, coverage options, and companies personalized for your price point. Get free car insurance quotes today on Insurify, America’s best-rated car insurance comparison site.
Frequently Asked Questions
Here are the top seven companies for gap insurance, ranked by the total number of car insurance policies, as reported by the Insurance Information Institute: Progressive, Allstate. Esurance, Liberty Mutual. Nationwide, American Family, Travelers. Other smaller companies offer gap insurance too, but they often cost more and often require an up-front payment.
Yes, you don't have to buy gap insurance at the dealership. Policies purchased through dealerships can be three times more expensive than those purchased through your car insurance company. There are also third-party insurers that sell stand-alone gap policies. We recommend you get your gap insurance and auto insurance from the same company for the lowest price.
While getting the best deal on gap insurance, why not do the same for your car insurance? Find a car insurance comparison tool like Insurify to compare real quotes for your combined driver profile and unlock savings and car insurance discounts. Insurify provides the cheapest car insurance quotes from top national companies in just a few minutes.
Gap Insurance By State
Like other kinds of insurance, gap insurance coverage options and requirements vary by state. Read up on your state’s coverages so you can make sure you’re always protected.
The car insurance quotes displayed are based on an analysis of Insurify’s database of over 40 million quotes from 500 ZIP codes nationwide. To obtain representative rates, Insurify’s data science team performs frequent comprehensive analyses of the factors car insurance providers weigh to calculate rates including driver demographics, driving record, credit score, desired coverage level, and more.
Insurify’s analysis also incorporates the Insurify Composite Score (ICS) assigned to each insurance provider. The ICS is a proprietary rating that weighs multiple factors reflecting the quality, reliability, and health of an insurance company. Ratings used to calculate the ICS include Financial Strength Ratings from A.M. Best, Standard & Poor’s, Moody’s, and Fitch; J.D. Power ratings; Consumer Reports customer satisfaction surveys and customer complaints; mobile app reviews; and user-generated company reviews.
With the above insights and ranking methods, Insurify is able to offer car insurance shoppers insight into how various insurance providers compare to one another in terms of both cost and quality. Note, actual quotes will vary based on unique attributes including the policyholder’s driver history and their garaging address.