Gap Insurance in Indiana (2024)

Indiana drivers who financed or leased their vehicle might benefit from gap insurance. But it’s not required by state law.

Sarah Sharkey
Written bySarah Sharkey
Sarah Sharkey
Sarah SharkeyInsurance Writer
  • 7+ years writing insurance and personal finance content

  • Contributor to top media, including USA Today

A passionate personal finance advocate, Sarah’s writing has graced the pages of many of the personal finance and insurance industries’ top web publications.

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Courtney Mikulski
Courtney MikulskiSenior Editor, Auto
  • 3+ years producing insurance and personal finance content

  • Main architect of the Insurify Quality Score

Courtney’s deep personal finance knowledge extends beyond insurance to credit cards, consumer lending, and banking. She thrives on creating actionable content.

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Updated April 15, 2024

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Vehicles depreciate over time, so your vehicle might be worth less than what you owe on your auto loan or lease agreement after some time. Guaranteed asset protection insurance — also called gap insurance — covers the difference between the vehicle’s value and what you owe on the loan if your insurance company declares your car a total loss after a covered claim.[1]

If you financed or leased your vehicle, gap insurance can provide much-needed financial protection. Here’s what Indiana drivers need to know about gap insurance.

Quick Facts
  • Allstate and Auto-Owners offer some of the best gap insurance coverage in the state.

  • Gap insurance can provide peace of mind for drivers who have negative equity on their auto loan.

  • You can usually buy gap insurance from an auto insurance company, but dealerships and lenders may offer some form of it as well.

What is gap insurance, and how does it work?

Gap insurance covers the difference between the insurance settlement after a total loss and your auto loan or lease, protecting you from being financially responsible for a car you can’t drive anymore. 

If your auto insurer declares your car a total loss from an accident or theft, your comprehensive or collision coverage will pay out your vehicle’s actual cash value (ACV), minus your deductible. Notably, your insurer won’t reimburse you for your car’s purchase price.[2]

But cars can lose value quickly. A new car’s value decreases by about 20% within the first year.[1]

If you took out a loan to purchase or you leased your car, its value might be less than what you owe on the loan or lease after a short period. Then, if your insurance company declares your car a total loss after an accident or theft, it’ll only pay out the car’s actual cash value, minus the deductible — and you’re financially responsible for the remainder of the loan or lease.

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What gap insurance covers in Indiana

Gap insurance is an optional coverage type that you can usually add on to an insurance policy with either comprehensive or collision coverage. The extra coverage will only kick in to pay the remaining value of your loan if the insurance company totals your car as part of a covered claim.[1]

Gap insurance doesn’t cover damage in every situation. It won’t cover everyday wear and tear or mechanical breakdowns. It also won’t apply to claims that the insurance company won’t cover through your comprehensive or collision insurance.

For Example

Let’s say your vehicle is worth $10,000, but you owe $15,000 on your auto loan. After totaling your vehicle in an accident, the insurance company pays out $10,000 under your collision coverage — which becomes $9,000 after your $1,000 collision deductible.

Without gap insurance, you’re on the hook to repay your lender $6,000. If you have gap insurance, this policy covers the remaining $6,000 to pay off your auto loan after the car accident.

Gap insurance vs. full coverage

A full-coverage auto insurance policy usually includes liability coverage, collision coverage, comprehensive coverage, and uninsured/underinsured motorist coverage. Gap insurance is typically not included in a full-coverage policy. Instead, drivers can add this specialty coverage to their policies.

If you own a vehicle with an outstanding auto loan balance higher than its current value, gap insurance can offer additional financial protection.

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Who needs gap insurance in Indiana?

Indiana law doesn’t require drivers to carry gap insurance. While this type of insurance coverage is an optional add-on, it can be a worthwhile addition for many drivers.

You may need gap insurance as an Indiana driver if:[1]

  • Your down payment was less than 20%. Making a low down payment when you purchase your car means your car’s value depreciation is likely to outpace your repayment of the loan.

  • The loan’s terms are longer than five years. If your loan or lease terms are longer than 60 months, you have a higher chance of owing more on the loan than the car is actually worth.

  • You already have negative equity from your last car loan. If you’ve taken out a car loan before and it rolled over, it’s important to get gap insurance to protect yourself from an even bigger difference between your debt and vehicle’s value.

  • You regularly travel long distances. If you drive your vehicle more than average, the value might depreciate more quickly. Gap insurance can protect you when your car’s mileage causes its value to drop below the auto loan balance.

  • You’re leasing or financing a luxury car. Certain car models, such as sports cars, depreciate faster than more standard ones.

Keep in Mind

If you put down at least 20% on your car, have a loan term of fewer than 60 months, or purchase your vehicle outright, you probably don’t need gap insurance. Even if you do buy this coverage, you can contact your car insurance company to remove it from your policy when you pay off your vehicle.

How to buy gap insurance in Indiana

While car dealerships might sell you gap insurance, it’s usually more affordable to purchase it through an auto insurance company.[1] Insurers that offer gap insurance typically sell it as an add-on to a full-coverage car insurance policy.

As you explore your options, it’s best to shop around. Car insurance companies calculate rates differently, resulting in significantly different costs among companies. Taking a few minutes to shop around for quotes could help you save on your car insurance costs.

Adding gap insurance coverage to your insurance policy will raise your rates but only by about $20 per year, according to the Insurance Information Institute (III).[1]

But purchasing a policy with the right coverage for your situation is a good idea. Once you find the company that offers coverage that suits your needs and budget, you can finalize your policy.

Best gap insurance companies in Indiana

Indiana drivers looking for the best gap coverage can find what they’re looking for in the top companies below.

Auto-Owners

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IQ Score
The Insurify Quality (IQ) Score uses more than 15 criteria to objectively rate insurance companies on a one-to-five scale. The Insurify editorial team researches insurer data to determine the final scores.
4.1
JD Power
J.D. Power data measures overall customer satisfaction and claims satisfaction based on a 1,000-point scale.
834
Liability Only
Liability-only insurance, sometimes called minimum-coverage insurance, pays for bodily injury and property damage to others in an accident the policyholder causes. It does not pay for the insured’s own damages.
$27/mo
Full Coverage
Full-coverage car insurance generally includes liability, collision, and comprehensive coverage, and may include other optional coverages such as uninsured motorist coverage. Collision covers a policyholder’s repair or replacement costs in case of an accident. Comprehensive covers damages caused by non-accident events. The average quote displayed here reflects policies with the following coverage limits: $50,000 bodily injury liability per person; $100,000 bodily injury liability per accident; $50,00 property damage liability per accident; $1,000 collision deductible; and a $1,000 comprehensive deductible.
$51/mo

Auto-Owners boasts relatively low rates. Its loan/lease gap coverage can provide more protection from depreciating value, but drivers can also include rental auto gap coverage to have more coverage when using rental cars.

Pros
  • High customer satisfaction

  • Multiple discounts

Cons
Read our Auto-Owners review
Jack - April 9, 2024
Verified

Poor Handling but Partial Payment Made

I had a major claim due to a fire, which was not my fault. They handled it poorly and the complex ended up tearing down my building. They did make a payment, but there was a $10,000 depreciation on my goods.

Erin - April 7, 2024
Verified

Unhappy with Renewal Costs

The premium is ridiculously expensive for the few miles I drive.

Brandy - April 6, 2024
Verified

Fair Prices from a Trustworthy Company

I've had zero issues!

Allstate

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IQ Score
The Insurify Quality (IQ) Score uses more than 15 criteria to objectively rate insurance companies on a one-to-five scale. The Insurify editorial team researches insurer data to determine the final scores.
4.2
JD Power
J.D. Power data measures overall customer satisfaction and claims satisfaction based on a 1,000-point scale.
847
Liability Only
Liability-only insurance, sometimes called minimum-coverage insurance, pays for bodily injury and property damage to others in an accident the policyholder causes. It does not pay for the insured’s own damages.
$68/mo
Full Coverage
Full-coverage car insurance generally includes liability, collision, and comprehensive coverage, and may include other optional coverages such as uninsured motorist coverage. Collision covers a policyholder’s repair or replacement costs in case of an accident. Comprehensive covers damages caused by non-accident events. The average quote displayed here reflects policies with the following coverage limits: $50,000 bodily injury liability per person; $100,000 bodily injury liability per accident; $50,00 property damage liability per accident; $1,000 collision deductible; and a $1,000 comprehensive deductible.
$128/mo

Allstate offers slightly above-average rates to Indiana drivers. But the company earned an above-average customer satisfaction rating in the 2023 J.D. Power U.S. Auto Claims Satisfaction study.

Pros
  • Well-established with superior ratings from A.M. Best

  • Pay-per-mile option available

Cons
  • Low customer satisfaction

  • Rates are merely average compared to other insurers

Read our Allstate review
Bruce - April 15, 2024
Verified

Great experience, but needs to be less expensive

I feel that I can get a cheaper rate.

George - April 15, 2024
Verified

What's Next?

Like most insurance companies, the rates keep going up. I spent over two months settling a claim.

James - April 14, 2024
Verified

Good

Allstate continually raises the rate at every renewal.

Progressive

Compare personalized, real-time quotes
IQ Score
The Insurify Quality (IQ) Score uses more than 15 criteria to objectively rate insurance companies on a one-to-five scale. The Insurify editorial team researches insurer data to determine the final scores.
4.2
JD Power
J.D. Power data measures overall customer satisfaction and claims satisfaction based on a 1,000-point scale.
847
Liability Only
Liability-only insurance, sometimes called minimum-coverage insurance, pays for bodily injury and property damage to others in an accident the policyholder causes. It does not pay for the insured’s own damages.
$68/mo
Full Coverage
Full-coverage car insurance generally includes liability, collision, and comprehensive coverage, and may include other optional coverages such as uninsured motorist coverage. Collision covers a policyholder’s repair or replacement costs in case of an accident. Comprehensive covers damages caused by non-accident events. The average quote displayed here reflects policies with the following coverage limits: $50,000 bodily injury liability per person; $100,000 bodily injury liability per accident; $50,00 property damage liability per accident; $1,000 collision deductible; and a $1,000 comprehensive deductible.
$128/mo

Progressive has relatively affordable average rates in Indiana. Its loan/lease payoff option provides coverage of up to 25% of the vehicle’s actual cash value.

Pros
  • Well-established with superior ratings from A.M. Best

  • Pay-per-mile option available

Cons
  • Low customer satisfaction

  • Rates are merely average compared to other insurers

Read our Allstate review
Bruce - April 15, 2024
Verified

Great experience, but needs to be less expensive

I feel that I can get a cheaper rate.

George - April 15, 2024
Verified

What's Next?

Like most insurance companies, the rates keep going up. I spent over two months settling a claim.

James - April 14, 2024
Verified

Good

Allstate continually raises the rate at every renewal.
  • 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 these insights, Insurify is able to offer drivers insight into how companies price their car insurance premiums. The data included on this page represent averages across driver ages, genders, credit scores, and driver profiles for Indiana drivers.

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Gap insurance in Indiana FAQs

Here’s how much your insurance can increase after an accident. Below are the answers to common questions about Indiana car insurance.

  • Does Indiana require gap insurance?

    No. Indiana state law doesn’t require drivers to carry gap insurance coverage. But Indiana drivers must carry a minimum amount of liability and uninsured/underinsured motorist coverage.[3]

  • Which companies sell gap insurance in Indiana?

    Auto-Owners, Allstate, and Progressive are just three insurance companies that sell gap insurance in Indiana, but you should shop around for quotes to find more auto insurers that offer this coverage.

  • Who should get gap insurance in Indiana?

    Drivers should consider gap insurance if they bought a car with less than 20% down, financed a vehicle for more than 60 months, leased a vehicle, rolled negative equity from an old car loan into a new loan, or purchased a vehicle that depreciates faster than average.[1]

  • Is gap insurance actually worth it?

    Like most types of insurance, gap insurance is worth it for some drivers and not for others. If you have an auto loan balance that’s more than the current value of your vehicle, gap insurance might be worth the cost. But if you can comfortably pay off the auto loan after a total loss, gap insurance might not be worth it.

Methodology

Insurify data scientists analyzed more than 90 million quotes served to car insurance applicants in Insurify’s proprietary database to calculate the premium averages displayed on this page. These premiums are real quotes that come directly from Insurify’s 50+ partner insurance companies in all 50 states and Washington, D.C. Quote averages represent the median price for a quote across the given coverage level, driver subset, and geographic area.

Unless otherwise specified, quoted rates reflect the average cost for drivers between 20 and 70 years old with a clean driving record and average or better credit (a credit score of 600 or higher).

Liability-only premium averages correspond to policies with the following coverage limits:

  • Bodily injury limits between state-minimum rates and $50,000 per person, $100,000 per accident
  • Property damage limits between $10,000 and $50,000
  • No additional coverage
Full-coverage premium averages correspond to the same bodily injury and property damage limits in addition to:
  • Comprehensive coverage with a $1,000 deductible
  • Collision coverage with a $1,000 deductible

Quotes for Allstate, Farmers, GEICO, State Farm, and USAA are estimates based on Quadrant Information Services’ database of auto insurance rates.

Sources

  1. III. "What is gap insurance?."
  2. III. "Determining your car's value and cost of repair."
  3. Indiana Department of Insurance. "Auto Insurance."
Sarah Sharkey
Sarah SharkeyInsurance Writer

Sarah Sharkey is a personal finance writer who enjoys helping people make savvy financial decisions. She covered insurance and personal finance topics. You can find her work on Business Insider, Money Under 30, Rocket Mortgage, Bankrate, and more. Connect with her on LinkedIn.

Courtney Mikulski
Edited byCourtney MikulskiSenior Editor, Auto
Courtney Mikulski
Courtney MikulskiSenior Editor, Auto
  • 3+ years producing insurance and personal finance content

  • Main architect of the Insurify Quality Score

Courtney’s deep personal finance knowledge extends beyond insurance to credit cards, consumer lending, and banking. She thrives on creating actionable content.

Featured in

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