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Best Cheap Gap Insurance Companies in Tennessee: Quotes, Discounts (2023)

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Tennessee drivers who lease or finance a new vehicle should consider adding gap insurance to their overall coverage. Gap insurance can protect you financially if your car is stolen or you’re in a car accident and your vehicle is totaled. Finding a policy with gap coverage is simple when you compare quotes with Insurify, the easiest way to score the best and cheapest coverage.

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Best Companies for Gap Insurance in Tennessee

How much is gap insurance in Tennessee?

The average total cost to insure a car with gap insurance in Tennessee is $223 a month. However, what you pay for car insurance will depend on a variety of factors, such as your age and your driving record.

Now, not every car insurance company operating in Tennessee offers gap coverage to customers. Gap coverage is not part of a standard auto insurance policy. Below is a list of the best companies that offer gap coverage and the average monthly premium for car insurance with gap coverage.

Insurance CompanyAverage Monthly Cost for Leased Cars in Tennessee
Direct General$184
Midvale Home & Auto$185
Bristol West$272
Liberty Mutual$272
The General$289
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.

See More: Cheap Car Insurance in Tennessee

What is gap insurance?

Gap insurance is a special car insurance policy that covers leftover financial obligations if a car is totaled. It stands for “guaranteed asset protection.” A gap policy on a leased vehicle covers any leftover lease payments, and a gap policy on a financed vehicle pays the leftover balance on a car loan.

If you total a leased vehicle, you are still obligated to pay the monthly lease payments until your lease expires. If you have a three-year lease and you total the car in the first six months, you’ll continue to owe payments to your leasing company for 30 months. If your lease payment is $200, you’ll be out $6,000.

When you purchase a car with a loan, it’s common for that car’s value to drop below the remaining balance on the loan, especially in the first year. Gap insurance covers the difference between the loan amount and the actual cash value of the vehicle.

Your loan or lease agreement could come with a gap waiver. This waiver releases you from the obligation to pay the remaining monthly payments of your lease or the leftover loan balance of your vehicle. These aren’t very common, but you can negotiate for one if you’re extra savvy.

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Who should buy gap insurance in Tennessee?

There are two instances where drivers are better off purchasing a gap policy. First, people who owe more than their car is worth—a.k.a. being underwater—should buy a gap policy. There are several ways in which your car can be worthless than the balance on your loan:

  • You buy a new car, as depreciation is 20 percent on average in the first year.

  • You put a small down payment on your loan.

  • You have a high interest rate on your car loan due to bad credit.

  • You put a lot of miles on your car annually.

When you total your vehicle, you’ll need to cover a ton of expenses. You’ll pay for a down payment on a new vehicle, its title and registration fees, and possibly higher insurance premiums, and you may need to cover any traffic fines or penalties. Paying for the remaining balance on your car loan doesn’t need to be one of those additional expenses.

The second occasion where gap coverage is recommended is for people who lease their vehicle. Their leasing company may even require it. The cost of lease payments can be very expensive. Gap insurance covers these expenses so you don’t have to.

Tennessee Gap Insurance Laws

Gap insurance is not required in the state of Tennessee. It’s optional coverage that drivers can purchase if they want to. However, Tennessee does allow lenders and lessors to require gap insurance as part of the loan or lease agreement.

The state minimums for Tennessee car insurance are as follows:

  • $25,000 bodily injury per person

  • $50,000 bodily injury per accident

  • $15,000 property damage per accident

Beyond minimum coverage requirements, you can purchase collision coverage, comprehensive coverage, underinsured and uninsured motorist protection, medical payments coverage, and gap insurance.

How much gap insurance do I need in Tennessee?

How much gap insurance you need for a financed vehicle depends on its value and the remaining balance on your loan. You can look up your car’s fair market value with Kelley Blue Book—that’s how much your insurance company will pay out in the event of a total loss. Subtract the fair market value from the loan balance to determine your insurance limits.

If you own a leased vehicle, simply multiply your monthly payment by the number of months left in your lease agreement. Each insurance company will have minimum and maximum limits you can purchase. Just be sure that the coverage limit you choose covers the minimum amount you need.

See More: How Much Car Insurance Do I Need?

How Gap Insurance Works in Tennessee

Gap insurance in Tennessee works like this: it pays the remaining balance on your loan after the comprehensive, collision, or liability policy pays the actual cash value of your totaled vehicle. A vehicle is totaled when it sustains more damage than the car is worth. If the car was leased, the gap policy pays out owed monthly lease payments to the lessor.

How Much Gap Insurance Costs in Tennessee

The total cost to insure a car with gap insurance in Tennessee is $223 a month. The gap coverage portion of that policy will typically cost $1 to $5 a month. Your exact costs will depend on your loan balance, car value, and/or lease payments, in addition to your driving history and other personal factors.

See More: Average Cost of Car Insurance in Tennessee

How to Buy Gap Insurance in Tennessee

Looking for the best deal on gap insurance? Shop with Insurify. Fill out one confidential form to compare insurance quotes for six or more car insurance policies with gap coverage. You can adjust your coverage options to understand the full range of policies and their costs. Only buy if the price is right. And don’t forget to save your profile for future comparison-shopping.

Frequently Asked Questions: Gap Insurance in Tennessee

  • No, car insurance laws in Tennessee do not require drivers to carry gap insurance. However, a lender or leasing company may require its customers to have gap coverage, which is legal. And, in instances where a driver is not required to purchase coverage, they may still choose to for their peace of mind.

  • In general, car insurance companies do not refund gap insurance premiums when you pay off your car. If you prepay your insurance premiums and end up not needing the coverage, you can receive a refund if you cancel coverage before the end of that term. In this instance, you would receive the portion of your premiums going toward gap coverage for the months where gap isn’t needed.

  • Many companies offer cheap gap insurance in Tennessee. The easiest way to find out which one will give you the lowest rate is by comparing quotes with Insurify. All you need to do is fill out a short form to view quotes from six or more companies confidentially. You only share your information when you decide to buy.

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  • 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 Service's database of auto insurance rates. With these insights, Insurify is able to offer drivers insight into how companies price their car insurance premiums.

JJ Starr
JJ StarrInsurance Writer

J.J. Starr is a health and finance writer with a background in banking, lending, and financial advising. She holds a Series 6, FINRA, and life insurance licensure and a master's degree from New York University. Through her writing, she strives to use her decade of experience to help consumers make sound financial choices. Connect with J.J. on LinkedIn.