How Much Is GAP Insurance: Everything You Need to Know

It’s important to know how much gap insurance costs if you want to buy this kind of protection. Gap insurance protects you from paying for a car you can no longer drive, which can happen if a vehicle is destroyed. This article breaks down everything you need to know about buying gap insurance.

what is differential insurance?

Gap insurance, or general asset protection insurance, covers the difference between a car’s value and the balance the owner owes on their lease or car loan if the vehicle is stolen or cannot be repaired after an accident. This is a benefit you can’t get from standard comprehensive and collision insurance policies, Bankrate says. Drivers are not required to carry gap insurance. however, some states require auto dealers to offer it to their customers.

Reading: How much is the gap insurance

how does gap insurance work?

According to wallethub, gap insurance covers the gap between the current value of the car and the amount the owner owes on the loan. If the car is totaled, gap insurance will cover the remaining balance after your standard insurance has paid the actual cash value of the vehicle. That way, you don’t owe the lender money after a car is stolen or totaled.

who needs differential insurance?

The following people can benefit from deficit insurance:

people who paid a small down payment on a car loan

You can get gap insurance if you only paid a small down payment on your car loan, thereby increasing the amount owed on the vehicle.


many car leases come with an insurance differential because leases tend to have lower monthly payments compared to car loans and therefore have a wider difference between the amount owed and the actual value of the vehicle .

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sports car owners

If your car has a rapid depreciation rate, having gap insurance can help cover the difference between the car’s actual value and the amount you still owe in the event of a serious accident or theft.

drivers whose car financing covers other products

You can also get differential insurance if your auto loan covers other products, like an extended service agreement or debt from other auto loans. These additions increase your debt without affecting your car’s value, so you may want to consider purchasing gap insurance to cover the difference.

owners of a vehicle with high mileage

If your car has high mileage, its value will depreciate faster than you can repay the loan. getting gap insurance protects you from negative equity, says wallethub.

Where can I get differential insurance?

here are places where you can buy gap insurance:

  • car dealers
  • lenders
  • banks and credit unions that finance your car purchase
  • insurance companies
  • Which insurance companies offer differential insurance?

    See also: How to Negotiate an Injury Settlement with an Insurance Claims Adjuster | Bruscato Law Firm

    If you’re looking for gap insurance, consider the following companies.

    state farm

    This insurer does not offer differential insurance, but buyers who finance their car through a state farm bank can opt for a feature called a payment protector, which works like differential insurance. You may qualify for this feature even if your insurance policy is from a different provider, as long as the loan was financed by State Farm.

    all states

    allstate gap insurance covers up to $50,000 of the difference between the primary auto insurance settlement and the money owed on the vehicle loan.


    Progressive Gap Insurance covers 25 percent of the vehicle’s actual cash value. The company allows policyholders to include gap insurance on their existing car insurance for as little as $5 per month.


    nationwide offers gap insurance. however, you must pay a deductible if you file a claim. If you intend to purchase your gap insurance policy, make sure the deductible is low enough that you can afford it if your vehicle is totaled.


    To qualify for gap insurance through AAA, your vehicle must have comprehensive comprehensive and collision insurance coverage. The company will waive up to $1000 of your deductible in the event your car is totaled.


    This company calls gap insurance auto loan and lease coverage. To qualify for gap insurance coverage from this company, you need full coverage insurance.

    united states

    The company provides a form of gap insurance called total loss protection for vehicles that are less than seven years old with an auto loan of less than $5,000. This policy waives up to $1,000 of your deductible. Please note that only military members and military family members can purchase US insurance policies. uu.

    You can also get travelers gap insurance, safeco, and american family, according to wallethub.

    how much does differential insurance cost?

    The cost of gap insurance depends on the subscriber. Dealers and lenders charge higher prices for differential insurance than auto insurance companies. Lenders and dealers sell gap insurance for a flat fee, usually between $500 and $700, which are the highest rates for this type of policy. In addition, you will pay interest on the amount, since it will be included in your loan.

    See also: Car Insurance Estimator – Estimate car insurance using our calculator

    Insurance companies, on the other hand, charge an average of $20 to $40 per year for gap insurance when buyers bundle it into an existing insurance policy. doing so alone increases the cost of your comprehensive and collision insurance by an average of five to six percent, making it much more affordable. If you want to buy a stand-alone gap insurance policy, you can expect to pay between $200 and $300, says courtesy of

    what factors affect the cost of the differential insurance policy?

    Factors that can affect the cost of gap insurance include:

    • vehicle actual cash value (acv)
    • location
    • vehicle age
    • auto insurance claim history
    • Will I get a refund if I paid for differential insurance up front and then sold my car?

      In most cases, if you paid for differential insurance up front and then sold the car, the provider will reimburse you for the unused portion of the policy.

      Check this out if you need additional information, resources, or guidance on auto insurance.


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      See also: What can small business owners do for health insurance?

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