Gap insurance covers the “gap” between what you owe on your loan or lease and how much your car is worth if it’s totaled or stolen. Because new cars depreciate quickly, drivers often find that their insurance payout won’t cover their remaining balance, leaving them with thousands of dollars to pay out of pocket.

Consider this example: Alex buys a new SUV for $40,000 with a small down payment and a loan. A year later, it’s totaled in an accident. The car’s actual cash value has dropped to $32,000, but Alex still owes $38,000 on the loan. Alex would have to cover that $6,000 shortfall without gap insurance.

If you’re still unsure whether you need gap insurance, we have a calculator that makes it easy to determine whether you do.

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Use our gap insurance calculator to simplify your decision

Our gap insurance calculator is more than just an estimate generator — it’s a personalized decision-making guide. It offers refund insights if you pay off your vehicle early and uses visual comparisons to simplify complex financial projections. Designed with real-world depreciation data and smart financial modeling, this tool helps drivers confidently navigate three key decision points to choose the proper coverage.

Do I need gap insurance?

Gap insurance covers the difference between your cars actual cash value (ACV) and the remaining balance on your auto loan or lease.
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Your loan balance
$25,000
Your vehicle value
$20,000
Gap amount you owe
$5,000
Expert Recommendation
We highly recommend considering gap insurance based on your vehicles value and loan balance. Our experts do not recommend gap insurance since your vehicle’s value is more than your loan amount.
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How long do I need gap insurance?
Input a few details to see if gap insurance is worthwhile for you.
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When to drop GAP insurance?
Look for the month/year when the vehicle`s value (purple dot) exceed the loan balance (black dot) — this is your indicator to potentially drop GAP coverage.
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How much is gap insurance
Company name Annual premium
(with gap)		 Annual premium
(without gap)		 Annual cost
of gap coverage
USAA* $1,047 $996 $51
Vermont Mutual $1,424 $1,353 $71
Mapfre Insurance $1,493 $1,424 $70
Frankenmuth Insurance $1,503 $1,402 $101
Auto Club Group ACG (AAA) $1,505 $1,423 $82
Erie Insurance $1,628 $1,390 $238
Safety Insurance $1,797 $1,772 $25
The Hanover $1,831 $1,760 $71
State Farm $1,869 $1,822 $46
Auto-Owners $1,912 $1,850 $62
Travelers $2,026 $1,977 $49
American Family $2,056 $1,998 $58
Nationwide $2,183 $2,115 $69
Shelter Insurance $2,480 $2,366 $114
Auto Club Enterprises (AAA) $2,483 $2,394 $89
Iowa Farm Bureau $2,543 $2,517 $26
Kemper $2,622 $2,531 $91
Progressive $2,692 $2,640 $53
The Hartford $2,891 $2,770 $121
Mercury Insurance $3,004 $2,962 $41
Amica $3,189 $3,063 $127
Allstate $4,066 $3,947 $119
Farmers $4,092 $3,928 $163
Sentry Insurance $5,980 $5,956 $24
CSAA Insurance (AAA) $6,302 $6,134 $168
Free, quick, and easy car insurance quotes.

How the gap insurance calculator works

Use our gap insurance calculator to:

  • Understand precisely how much coverage you need
  • Decide how long to keep your coverage
  • Avoid overpaying
  • Avoid being underinsured

How do you calculate a gap insurance refund?

A gap insurance refund is the return of unused premiums if you cancel your policy before it expires, and you paid for it upfront. 

If you pay off or sell your car early, you may be eligible for a prorated refund of your unused gap insurance coverage. The refund amount is typically based on how much of the policy term remains.

Here’s a simple way to calculate it:

  1. Find your original premium. For example, $600 for a 60-month loan.
  2. Determine how many months you used. Say you paid off the loan after 36 months.
  3. Subtract the used portion. 36/60 = 60% of the policy used.
  4. Calculate the unused portion. 40% remains.
  5. Multiply your premium by the unused percentage. $600 × 40% = $240 refund.

How do you decide if gap insurance is worth it?

Gap insurance is affordable – the average cost in the U.S. is $89 per year or about $7 per month. If you owe more on your loan than the car is worth, made less than a 20% down payment, don’t have enough savings to pay the gap if your car is totaled/stolen or drive more than 15K miles a year, you should purchase gap coverage.

Final thoughts

If you have a lease on a vehicle, your leasing company will typically require gap insurance; sometimes, it is part of the lease payment. And if you have a new or luxury car, it’s a smart idea to have gap insurance to protect that investment since newer vehicles depreciate so quickly.

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author-img Laura Longero Executive Editor
Laura Longero is an insurance expert with more than 15 years of experience educating people about personal finance topics and helping consumers navigate the complexities of auto insurance. She writes and edits for QuinStreet’s CarInsurance.com, Insurance.com and Insure.com. Prior to joining QuinStreet, she worked as a reporter and editor at the USA Today Network. Laura completed the pre-licensing course in Personal Lines Property & Casualty Insurance in Nevada.
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Leslie Kasperowicz is a home and auto insurance expert, educator and content creation professional. She has nearly two decades of experience in the insurance industry, first as a customer service representative at Farmers Insurance and now as a researcher and writer for QuinStreet’s CarInsurance.com, Insurance.com and Insure.com. She also has written for insurance shopping sites such as ExpertInsuranceReviews.com and InsuranceHotline.com. Leslie completed the state-required pre-licensing course in Personal Lines Property & Casualty Insurance in Minnesota.
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