What Is Gap Insurance?
Gap insurance is car insurance coverage that pays for the “gap” between what a car is worth and what the driver owes on their auto loan or lease if the car is totaled or stolen. Standard collision and comprehensive insurance policies only reimburse the value of the totaled car, not any balance owed on a loan or lease.
Gap insurance pays for the difference between what a totaled car is worth and what the driver still owes on their auto loan or lease.
Drivers should consider getting gap insurance if they made a small loan down payment, lease their car, or have a car that depreciates quickly.
Where to get Gap Insurance?
You can get gap insurance from your car insurance company, loan provider, or dealership.
How much does Gap Insurance Cost?
Gap insurance costs between $400 and $700 when purchased from a dealership and between $20 and $40 per year when added to a car insurance policy.