How Much Is Gap Insurance?

The cost of gap insurance depends on how you purchase the policy and the car you drive, among other factors. We gathered quotes for a financed 2020 Ford F-150 and found that gap insurance costs can range from $20 to $56 per year. But if you buy gap insurance through a dealer or your lender, you could pay a flat rate from $200 to well over $500. Your gap insurance costs will vary based on your claim history, location, and the type of car.

Gap insurance (guaranteed asset protection) pays the difference between your remaining auto loan balance and your vehicle’s value if the car is totaled or stolen. While gap insurance isn’t usually required, it can be beneficial if you have (or expect to have) negative equity when leasing or financing a vehicle.

Learn more about the cost of gap insurance, including which companies offer it and how you can save money on your gap insurance cost.

Cost of Gap Insurance

If you’re wondering how much gap insurance costs, the short answer is—it depends. There’s no national average gap insurance cost because premiums are calculated based on unique factors, such as your vehicle’s actual cash value (ACV).

Adding gap insurance to your car insurance policy could add as little as $20 per year to your premium. But if you finance the cost of gap insurance through a lender, you could be paying interest on the cost of that coverage for years to come. 

Here’s a look at how much gap insurance costs from three of the largest car insurance companies.

Quotes are for a 43-year-old male driver in Austin, Texas with a financed 2020 Ford F-150. The driver has no recent accidents or traffic violations and has the following coverages:

• $30,000/$60,000/$25,000 personal liability insurance (Texas state minimum)
• Collision insurance with a $1,000 deductible
• Comprehensive insurance with a $1,000 deductible

Top Gap Insurance Companies

Many car insurance companies sell gap insurance to drivers with an active auto insurance policy. Here are some top gap insurance providers and how their gap insurance policies work.

State Farm

Payoff Protector is State Farm’s gap insurance. If your car is totaled, Payoff Protector pays off the difference between what your car is worth and what you owe. The coverage is only available if you finance your vehicle through State Farm Bank. Unlike other insurance companies, however, State Farm automatically includes Payoff Protector when you get a loan.

Allstate

Allstate offers robust gap insurance for leased and financed cars. If your vehicle is totaled or stolen, Allstate will pay up to $50,000 toward your remaining auto loan balance. Additionally, Allstate will cover your primary deductible (collision or comprehensive insurance) up to $1,000.

Progressive

Progressive offers cover similar to gap insurance—“loan/lease payoff coverage”— but it’s more limited. Progressive’s coverage will pay up to 25% of your vehicle’s value (on top of your cash settlement) if your car is totaled. However, the exact coverage limits vary based on which state you’re in.

Nationwide

If you have a car insurance policy from Nationwide, you can add an optional gap insurance endorsement to cover your leased or financed vehicle. 

USAA

USAA doesn’t offer gap insurance. Instead, it has Car Replacement Assistance (CRA). If your car is totaled, CRA will give you your vehicle’s ACV plus up to 20% of the ACV.  

Factors Influencing Cost

It’s hard to determine the average gap insurance cost because rates vary for every driver. These are a few of the factors that can affect the cost of your gap insurance coverage.

Vehicle ACV

Your vehicle’s ACV is equal to the fair market value of the car, including depreciation. If your car is totaled, your insurance company will typically give you a cash settlement equal to the totaled car’s ACV. As a result, gap insurance premiums could be more expensive for high-value cars.

Where You Purchase Coverage

When you buy or lease a vehicle, you can often get gap insurance through your insurer, the dealer, or your lender. It’s usually less expensive to get gap insurance through your insurance provider.

Insurance Claim History

If you have recent accidents or other insurance claims on your driving record, your rate could be higher. Gap insurance only kicks in when your vehicle is totaled or stolen, so drivers with a history of past claims could be viewed as riskier to insure.

Insurance Company

If you choose to purchase gap insurance through a car insurance provider, different underwriters might charge different rates. Consider getting car insurance quotes from several companies to see which can provide the lowest gap insurance rate.

How to Save Money on Gap Insurance 

Gap insurance is affordable. However, there are still ways to lower your rate:

• Avoid high-value vehicles: Vehicles with a high value can have more expensive gap insurance premiums. Choosing a car with a lower value could help you save money.
• Get coverage through an insurance company: It’s usually cheaper to purchase gap insurance from your car insurance company rather than the dealership or your lender.
• Shop around: If you’re shopping for car insurance and gap insurance, get quotes from a few different insurance companies to see which one can offer you the cheapest rate. 

How to Choose the Best Gap Insurance 

Unlike car insurance policies, you can’t usually customize your gap insurance coverage. However, there are a few things to remember as you shop for the best gap insurance.

First, look at the policy’s fine print before you purchase coverage to see what is and is not covered. You should also check to see if the gap insurance has coverage limits.

For example, Allstate will pay up to $50,000 of your auto loan balance if your car gets totaled or stolen, and pay your primary deductible. 

However, Progressive’s coverage, which is similar to gap insurance, will pay up to 25% of your vehicle’s value after it’s totaled. The limits for other insurers might be higher or lower. So, if your car is totaled and its ACV is $10,000, the most Progressive’s version of gap coverage would provide is $2,500, even if what you owed on the car was more than that. 

It’s also a good idea to compare several gap insurance policies. You can compare coverage from a few insurance companies and then see how they stack up against policies from the car dealership or lender.