Jessica Sautter is a Content Writer for CarInsuranceCompanies.com with a Bachelor’s Degree from Eastern Michigan University in Elementary Education with a Major in Reading and a Minor in Mathematics.

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Chris Harrigan has an economic degree from Limestone College and an MBA from Clemson University. He previously managed auto insurance claims for Enterprise Rent-A-Car. Currently, he is using his business and insurance expertise to provide insurance data analysis and visualizations to enhance the user experience.

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Reviewed by Chris Harrigan
Former Auto Insurance Claims Manager

UPDATED: Oct 5, 2021

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Key Takeaways

  • Some of the best gap car insurance companies include Travelers, The Hartford, Liberty Mutual, Nationwide, and Progressive
  • Gap insurance covers the difference between your loan or lease balance and the actual cash value of your vehicle if it is totaled or stolen
  • Gap insurance is beneficial for those who finance their vehicles since vehicles often depreciate faster than your loan is paid down

If you have a financed vehicle, it is important to make sure you have the right amount and types of coverage so that your vehicle is protected and you’re able to pay your loan no matter what.

Gap insurance will ensure your loan is still paid even if your car is totaled and becomes unusable. If you’re wondering where to buy gap insurance, take a look at our list of the best gap car insurance companies below.

Entering your ZIP code into our free quote comparison tool above to see free gap car insurance quotes.

What are the best gap car insurance companies?

Gap insurance is a common insurance product, so you should be able to find it from many major car insurance companies. Some of the best gap insurance companies are listed below.

Travelers

Travelers offers affordable gap insurance for about 5% of the cost of your vehicle’s comprehensive and collision rates. Travelers calls its product “loan/lease gap insurance,” and you must be the original owner of a car purchased directly from a new car dealer to qualify for this coverage.

The Hartford

You can buy gap insurance from The Hartford within 30 days of the day you buy or lease a vehicle. If you are an AARP member, you may be able to get discounted rates and a policy that is specialized for seniors.

Liberty Mutual

Liberty Mutual‘s gap insurance is typically priced between $5 and $15 per month. Even though this can be more expensive than some other companies, it’s easier for existing Liberty Mutual customers to add this to coverage to their policy rather than switching to another company for just a few dollars less.

Nationwide

If your car is six years old or less, you could qualify for Nationwide‘s gap insurance. The price of this policy will depend on the value of your car.

Progressive

Progressive offers a variety of coverages for cheap prices. It calls its gap insurance product “loan/lease payoff,” which costs around $5 per month.

However, the maximum payout is 25% of the car’s actual cash value, so it may only be beneficial if the difference between your balance and insurance payout is less than 25% of the actual cash value of your car.

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What is gap insurance, and what does it cover?

Gap insurance stands for “guaranteed asset protection,” and it covers the difference between your loan balance and the car’s actual cash value or your insurance company’s payout if your car is totaled or stolen.

For example, if your vehicle is totaled with an actual cash value of $13,000, but you still owe $16,000 on the loan, your collision or comprehensive insurance would pay $13,000 (minus your deductible), and your gap insurance would cover the remaining $3,000 to pay off your loan.

Gap insurance doesn’t typically cover your deductible amount. However, it will pay out regardless of who is at fault for an accident.

It is an optional coverage, but most financing companies will require that you add it to your policy so that they know they will receive the full loan amount if your car is totaled or otherwise unusable.

Gap insurance works with your collision or comprehensive coverage, so it will generally cover your loan balance for any claim that is covered by these other coverages, including accidents, theft or vandalism, and natural disasters.

How much is gap car insurance?

Gap car insurance rates may vary depending on where you buy your gap insurance. If you buy it from a dealership, you could end up paying between $500 and $700 per year. If these rates are included in your loan, that means you’ll also have to pay interest.

If you buy a standalone gap car insurance policy from a third-party company, you could pay between $200 and $300 per year.

The most affordable option is to purchase your gap insurance from your insurance company as an add-on to your car insurance policy. This may cost around $5 per month.

If you’ve already purchased a gap insurance policy from a dealership, you may be able to cancel this policy to switch over to your car insurance company. Just make sure to purchase the policy you’re switching to before you cancel.

How can I save on gap car insurance?

Gap insurance is already an extremely affordable coverage add-on, so there are very few ways to save on the cost of gap insurance. However, there are many ways to save on the cost of your overall car insurance policy.

You may be able to benefit from discounts offered by your car insurance company, such as the ones listed in the table below:

Available Insurance Discounts by Type
Vehicle DiscountsDriver/Customer DiscountsPersonal Discounts
Active Disabling DeviceClaim FreeEmergency Deployment
Adaptive Cruise ControlContinuous CoverageFamily Legacy
Adaptive HeadlightsDefensive DriverFamily Plan
Anti-Lock BrakesDriver's EducationFederal Employee
Audible AlarmDriving Device/AppFurther Education
Automatic BrakingEarly SigningGood Student
Blind Spot WarningFull PaymentHomeowner
Daytime Running LightsGood CreditLife Insurance
Economy VehicleLoyaltyMarried
Electronic Stability ControlMultiple PoliciesMembership/Group
Farm/Ranch VehicleMultiple VehiclesMilitary
Forward Collision WarningNew Customer/New PlanNew Address
Garaging/StoringOccasional OperatorNew Graduate
Green/Hybrid VehicleOnline ShopperNon-Smoker/Non-Drinker
Lane Departure WarningOn-Time PaymentsOccupation
Newer VehiclePaperless/Auto BillingRecent Retirees
Passive RestraintPaperless DocumentsStable Residence
Utility VehicleRoadside AssistanceStudent Away
Vehicle RecoverySafe DriverStudent or Alumni
VIN EtchingSeat Belt UseVolunteer

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You can contact your car insurance company to ask about the discounts available.

Another way to save on your car insurance rates is to raise your deductible. If you can afford to pay more out of pocket, you may be able to save more in the long run by decreasing your monthly rates.

Lastly, you should compare rates from multiple companies before deciding on a car insurance company. Insurance companies’ rates can vary widely, so taking the time to find the company that provides the most affordable gap car insurance may be worth it.

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Do I need gap insurance?

If you are financing your vehicle, gap insurance may be a good investment. Your car is likely to depreciate faster than your loan balance will be paid off. Therefore, if your car is totaled, your insurance company will pay less than what you owe on the loan.

Many lenders require that you purchase gap insurance, so it is a must if you’re financing with one of these lenders. However, there are some instances in which gap insurance could be an especially good investment, such as:

  • If you have a loan that is 60 months or longer
  • If you have a loan with a high interest rate
  • If your down payment is less than 20%
  • If you had negative equity from a previous loan
  • If you buy or lease a high-value vehicle that depreciates faster

If you want to buy gap car insurance, enter your ZIP code into our free quote comparison tool above to find a gap car insurance company near you.