How much does GAP insurance cost?
GAP insurance cost will depend on several factors, including where you buy it. It can cost you as little as $30 annually if you buy it from an auto insurance company. You can also choose to purchase GAP coverage from a dealership or bank, but this will usually end up costing you more. You may need GAP insurance if you lease your car.
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Diego Anderson is a Real Estate Agent based in the Bay Area of California. Having received his Real Estate License at the age of 18, he wasted no time learning the ins and outs of the industry. With a focus on residential dual agency, he has a passion for supporting and educating families on their home buying and selling decisions. He is no stranger to new builds and new developments. He also r...
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UPDATED: Feb 28, 2024
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Editorial Guidelines: We are a free online resource for anyone interested in learning more about auto insurance. Our goal is to be an objective, third-party resource for everything auto insurance related. We update our site regularly, and all content is reviewed by auto insurance experts.
UPDATED: Feb 28, 2024
It’s all about you. We want to help you make the right coverage choices.
Advertiser Disclosure: We strive to help you make confident insurance decisions. Comparison shopping should be easy. We are not affiliated with any one insurance provider and cannot guarantee quotes from any single provider.
Our insurance industry partnerships don’t influence our content. Our opinions are our own. To compare quotes from many different insurance providers please enter your ZIP code above to use the free quote tool. The more quotes you compare, the more chances to save.
On This Page
- The cost of GAP insurance depends largely on where you purchase it from. GAP insurance from an auto insurance company costs about $30 annually, while the same coverage from a dealership can cost upwards of $500 with interest
- GAP insurance is usually required if you’re leasing a vehicle
- GAP insurance is ideal for drivers who are actively paying off the vehicle they’ve purchased because it covers the difference between what you paid for a car and what it’s worth after it leaves the lot
GAP insurance, which stands for guaranteed asset protection, helps you cover the difference between the market value of your vehicle and what it was worth before it left the lot. Basically, if your vehicle is totaled but you still owe money on the lease or loan, you’ll want GAP insurance.
Whether you buy it from a car dealer or an auto insurance company, GAP insurance could save you thousands if you get into an accident in a vehicle that you haven’t fully paid for. But how much will GAP insurance cost you?
With this guide, we’ll go over the cost of GAP insurance, show you where to buy gap insurance at an affordable price, and take a look at why you might want to purchase it for your new car or truck.
Once you know if GAP insurance is right for you, enter your ZIP code in the free online tool above to compare auto insurance rates and find a coverage option that’s right for you.
How much does GAP insurance cost?
GAP insurance’s cost varies depending on where you buy it from. Generally, GAP insurance from an insurance company will cost $30 per year on average, while GAP insurance from a dealership may cost upwards of $500.
It’s also important to keep in mind that GAP insurance is only valuable as long as the amount you owe on your vehicle exceeds the actual value of your car. As soon as you’ve paid off enough of your loan for your regular full coverage auto insurance to completely cover the cost of your totaled vehicle, you should contact your insurance company or dealership and ask about dropping your GAP coverage. This is when when GAP insurance does not pay off.
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Where can you buy GAP insurance?
While you can buy GAP insurance from dealerships, in most cases, you’ll want to look for GAP insurance from an auto insurance company as this is usually far less expensive. GAP insurance from dealerships (and banks) may also charge interest. Even the most seemingly affordable GAP insurance from a dealership could end up costing you more than coverage from an insurance company.
https://www.youtube.com/watch?v=4ZQmb_L1Hxk
These major auto insurance companies all offer GAP insurance:
- Progressive
- Geico
- Allstate
- Esurance
- Travelers
- The Hartford
- Liberty Mutual
- American Family
- USAA
- Nationwide
What is the best auto insurance company that offers GAP insurance?
As GAP insurance will likely be a temporary form of coverage, it probably shouldn’t be your first priority when comparing insurance companies. That said, many major insurers offer affordable GAP insurance coverage that will cost you far less than similar options from a dealership or bank.
Read more: Does State Farm offer GAP insurance?
The companies with the best auto insurance rates for you will vary based on your location, vehicle, and driving history. We recommend starting your search by looking at options from Progressive, Geico, and Allstate as these are some of the largest auto insurance companies in the United States by market share.
Is GAP insurance worth it?
GAP insurance is almost certainly worth the modest increase to your yearly insurance payments if you want to be sure you’re getting back what you actually paid for your new car — as opposed to what it’s worth after it leaves the lot.
The table below will give you an idea of how much the value of your vehicle drops immediately after purchase.
| New Car Depreciation Scenario | Cash Value of Car |
|---|---|
| Brand new car cost | $30,000 |
| Car depreciation rate | 11% |
| Actual cash value of car | $26,700 |
In the scenario above, you would essentially lose $3,000 even if your auto insurance completely covers your totaled car (and that’s before we take your deductible into account). If you’re still paying off your car, you’d be even worse off without GAP insurance, as you would now owe $3,000 and have no car to show for it.
Read more: How to Buy Vehicles Directly From Insurance Companies
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Who should purchase GAP insurance?
The Insurance Information Institute describes a few situations where GAP insurance would probably benefit a driver:
- If you’ve made less than a 20% down payment on your new vehicle
- If your vehicle is financed for 60 months or longer
- If you’re leasing your vehicle (GAP insurance is generally a requirement in this case anyways)
- If your vehicle depreciates faster than an average car or truck
- If you’ve rolled over negative equity from one car loan to another
What to Remember About GAP Insurance
- GAP insurance is usually required if your leasing a vehicle and is still a smart purchase if you owe money on your new car for a different reason. Without GAP insurance, you could end up paying thousands for a totaled vehicle
- You should always purchase GAP insurance from an auto insurance company instead of a dealership or bank. By doing so, you’ll pay less overall and avoid the interest charged by dealerships
- You don’t need GAP insurance if you’re not making payments on your vehicle. As soon as the value of your vehicle equals or exceeds the amount you owe on it, GAP insurance becomes an unnecessary expense
Now that we’ve taken a look at how much GAP insurance costs and who should purchase it, try our free online quote tool to compare companies and find the most affordable auto insurance coverage in your area.
Case Studies: Cost of GAP Insurance
Case Study 1: Affordable GAP Insurance from Auto Insurance Company
John purchased GAP insurance from his auto insurance company. He pays approximately $30 annually for his coverage. This option is affordable and provides him with the peace of mind knowing that he will be protected if his vehicle is totaled.
Case Study 2: Costly GAP Insurance from Dealership
Sarah decided to buy GAP insurance from a dealership when she purchased her new car. However, she ended up paying around $500 for the coverage. The dealership’s GAP insurance was significantly more expensive compared to the option available from an auto insurance company.
Case Study 3: Comparison Shopping for GAP Insurance
Michael wanted to find the best deal on GAP insurance, so he compared quotes from different insurance providers. After researching various options, he discovered that Progressive, Geico, and Allstate offered affordable GAP insurance coverage. He chose a policy from Progressive, which fit his budget and provided the coverage he needed.
Case Study 4: Value of GAP Insurance for Leased Vehicles
Emily leased a vehicle and was required to have GAP insurance. She opted for GAP coverage from her auto insurance company, which cost her approximately $30 per year. This insurance protected her from potential financial loss if her leased vehicle was totaled.
Case Study 5: Importance of GAP Insurance for Financing
Robert financed his new car with a loan and chose to purchase GAP insurance. He made a down payment of less than 20% and had a financing term of 60 months. The GAP insurance ensured that he wouldn’t face a significant financial burden if his car was declared a total loss.
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Frequently Asked Questions
How much does GAP insurance cost?
The cost of GAP insurance can vary depending on several factors, such as the type of vehicle, the length of the coverage, and the insurance provider you choose. However, on average, the cost of GAP insurance is typically around 5% to 6% of the comprehensive and collision coverage premiums on your auto insurance policy.
Can I negotiate the cost of GAP insurance?
While you may not be able to negotiate the cost of GAP insurance directly, you can shop around and compare prices from different insurance providers. This allows you to find the most competitive rates available and choose the one that best fits your budget.
Does the cost of GAP insurance depend on the value of the vehicle?
Yes, the cost of GAP insurance can depend on the value of the vehicle. Generally, the more expensive the vehicle, the higher the cost of GAP insurance. This is because the potential gap between the vehicle’s actual cash value and the amount owed on the loan or lease is greater for more expensive vehicles.
Are there any discounts available for GAP insurance?
Some insurance providers may offer discounts on GAP insurance. For example, you might be eligible for a discount if you have multiple policies with the same insurance company or if you belong to certain professional or alumni associations. It’s worth exploring different insurance providers to see if any discounts are available.
Can I purchase GAP insurance separately from my auto insurance?
Yes, you can often purchase GAP insurance separately from your auto insurance. While many insurance providers offer GAP insurance as an add-on to an auto insurance policy, you also have the option to obtain it from specialized providers or directly from the dealership where you purchased your vehicle.
Can I cancel GAP insurance if I no longer need it?
Yes, you can usually cancel GAP insurance if you no longer need it. However, it’s essential to review the terms and conditions of your policy and consult with your insurance provider to understand any cancellation fees or requirements that may apply.
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Diego Anderson
Licensed Real Estate Agent
Diego Anderson is a Real Estate Agent based in the Bay Area of California. Having received his Real Estate License at the age of 18, he wasted no time learning the ins and outs of the industry. With a focus on residential dual agency, he has a passion for supporting and educating families on their home buying and selling decisions. He is no stranger to new builds and new developments. He also r...
Licensed Real Estate Agent
Editorial Guidelines: We are a free online resource for anyone interested in learning more about auto insurance. Our goal is to be an objective, third-party resource for everything auto insurance related. We update our site regularly, and all content is reviewed by auto insurance experts.