CarInsurance.com Insights
- Buy gap insurance from your auto insurer to pair it with existing coverage and usually pay the lowest long-term cost.
- Choose gap coverage when you owe more than the car’s value to avoid paying the remaining loan after a total loss.
- Check your lender’s requirements since some lease and finance contracts mandate gap coverage until the loan balance drops.
- Review cancellation rules before buying because some providers refund unused months while others charge upfront, nonrefundable fees.
- Drop gap insurance once you’re no longer upside-down to avoid paying for protection you no longer need.
Gap insurance (guaranteed asset protection) pays the difference between your car’s actual cash value and your remaining loan balance if your vehicle is totaled or stolen. This coverage is more common than many drivers realize.
In fact, it was chosen by consumers in approximately 39% of vehicle financing deals, according to a University of Michigan study published by the Federal Reserve. More than 9 in 10 of those who purchased gap insurance expressed satisfaction with their decision.
Below, we break down every option — costs, cancellation rules, and provider lists — so you can choose the right gap insurance with confidence and move forward knowing you’re covered.
Where to buy gap insurance: Compare your options
You can buy gap insurance from your auto insurer, a car dealership, your lender or credit union, or a stand-alone provider like EasyCare.
Your auto insurer is typically the cheapest option at $20 to $40 per year, while dealerships charge $500 to $700 and roll it into your loan. The right choice depends on your situation, budget and the level of flexibility you want.
“This type of coverage is typically only available if you are the original loan or leaseholder on a new vehicle, but you may be able to obtain it for certain used vehicles,” said Mark Friedlander, director of corporate communications for the Insurance Information Institute (Triple-I).
Gap insurance is cheapest when you purchase it from your insurance company, and you can cancel it at any time. In the table below, see an overview of how these options compare.
| Coverage details | Insurance company | Auto loan lenders/car dealerships | Credit unions | Specialized provider, such as EasyCare or AutoPay |
|---|---|---|---|---|
| Cost range | $20 to $40 per year when you add it onto your existing auto policy | $500 to $700 per year when you finance your vehicle | One-time fee of $550 to $600 | One-time fee of $150 to $300 |
| Cancelability/refund rules | Can cancel at any time and receive a prorated refund | Varies by lender/dealer, but a prorated refund is usually available; some dealers have a 30-day cancellation period in which you can cancel and collect a full refund in 30 days | Can cancel at any time and receive a prorated refund | Can cancel at any time and collect a prorated refund as long as you have specific documentation based on the reason for the cancellation |
Buying gap insurance from your auto insurer
Many major auto insurers, including State Farm, Nationwide, Progressive, Allstate, USAA, AAA and Esurance, offer gap coverage as an add-on to your existing policy, but not all do. You may need to shop around.
“You will reap significant savings by adding gap insurance to your current auto insurance policy versus purchasing separate coverage from a car dealer or financing company,” Friedlander said.
Below is a list of insurance providers that offer gap coverage.
- Allstate
- American Family
- Amica
- Auto Owners
- Chubb
- Erie
- Farmers
- Frankenmuth Insurance
- Mercury Insurance
- Midvale Home & Auto
- Nationwide
- Kemper
- Progressive
- Liberty Mutual
- Safety Insurance
- Sentry Insurance
- Shelter Insurance
- State Farm
- The Hanover
- The Hartford
- Travelers
- USAA
These insurance companies do not offer gap insurance:
- Alfa
- Anchor
- Bristol West
- COUNTRY Financial
- Elephant
- GEICO
- National General
Pros and cons of buying gap insurance from your auto insurer
Pros
- Gap insurance through your car insurance provider is usually the most affordable option. It often costs significantly less than buying from a dealer or lender.
- It’s easier to manage when you purchase from your auto insurer. Keeping gap coverage bundled with your standard auto policy means one point of contact for claims and billing.
- It’s flexible and cancelable. You can often remove gap insurance from your policy at any time and receive a prorated refund if coverage is no longer needed (such as when your loan balance drops below your car’s value).
- It’s usually customizable. Many insurers allow you to tailor your policy based on your vehicle’s value and loan balance.
Cons
- You can’t buy gap coverage on its own – you have to add it to your full coverage policy.
- Gap coverage is not offered by all insurers. Some companies don’t sell it, especially for used cars or older vehicles.
- There may be eligibility requirements. You may need to meet specific criteria, such as being the original owner or having a recent model year.
How to buy gap insurance online
You can buy gap insurance online if you do not already have an auto insurance policy or your current insurer doesn’t offer gap coverage. An online insurance provider can be an effective way to request quotes quickly and find an affordable policy.
“Requesting and comparing multiple quotes from an online site may be the most convenient way to find a policy at the lowest price,” says Laura Adams, a personal finance and insurance expert in Vero Beach, Florida.
Buying gap insurance from the car dealership
The finance department at your auto dealership may offer gap insurance and roll the cost into your loan payments. Since you’ll likely pay a flat fee plus interest on top of it, dealer gap insurance tends to be the most expensive option. Also, your coverage will end once you refinance because you’ll no longer have your loan.
Gap insurance through your lender or credit union
If you’re financing your vehicle through a lender or credit union, they may be able to add gap insurance onto your coverage. However, depending on your financing company, this may not be an option and if it is, you can expect to pay more for a gap policy than if you were to go through a car insurance company.
Stand-alone gap insurance companies
Some companies like EasyCare or AutoPay specialize in standalone gap insurance. You’ll typically pay a flat, one-time fee in exchange for coverage. While you might get a better deal than if you were to go through a dealership or lender, you’ll likely secure a cheaper rate with an auto insurer.
How much does gap insurance cost in 2026?
Gap insurance costs $20 to $40 per year on average when added to your auto policy. Sentry Insurance has the lowest gap premium at $24 per year, while Erie charges the most at $238. Dealership gap coverage typically runs $500 to $700 as a flat fee.
The table below shows rates for 24 insurers so you can find where yours falls.
| Company | Premium with gap insurance | Premium without gap insurance | Cost of gap insurance |
|---|---|---|---|
| Sentry Insurance | $5,980 | $5,956 | $24 |
| Safety Insurance | $1,797 | $1,772 | $25 |
| Iowa Farm Bureau | $2,543 | $2,517 | $26 |
| Mercury Insurance | $3,004 | $2,962 | $41 |
| State Farm | $1,869 | $1,822 | $46 |
| Travelers | $2,026 | $1,977 | $49 |
| Progressive | $2,692 | $2,640 | $53 |
| American Family | $2,056 | $1,998 | $58 |
| Auto-Owners | $1,912 | $1,850 | $62 |
| Nationwide | $2,183 | $2,115 | $69 |
| Mapfre Insurance | $1,493 | $1,424 | $70 |
| The Hanover | $1,831 | $1,760 | $71 |
| Vermont Mutual | $1,424 | $1,353 | $71 |
| Auto Club Group – ACG (AAA) | $1,505 | $1,423 | $82 |
| Auto Club Enterprises (AAA) | $2,483 | $2,394 | $89 |
| Kemper | $2,622 | $2,531 | $91 |
| Frankenmuth Insurance | $1,503 | $1,402 | $101 |
| Shelter Insurance | $2,480 | $2,366 | $114 |
| Allstate | $4,066 | $3,947 | $119 |
| The Hartford | $2,891 | $2,770 | $121 |
| Amica | $3,189 | $3,063 | $127 |
| Farmers | $4,092 | $3,928 | $163 |
| CSAA Insurance (AAA) | $6,302 | $6,134 | $168 |
| Erie Insurance | $1,628 | $1,390 | $238 |
| USAA* | $1,047 | $996 | $51 |
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How do you choose the right gap insurance policy?
To choose the right gap policy, compare at least three quotes — dealers can mark up gap coverage by 200% to 300% over independent providers. Check coverage limits, cancellation rules, and whether your deductible is covered.
Once your loan balance drops below your car’s value, you can confidently cancel and stop paying for protection you no longer need. Here’s what you need to know about buying a gap insurance policy.
1. Compare costs among gap insurance providers carefully.
“Try to get at least three to four quotes from different insurers. You’ll be surprised at the price differences. Sometimes dealers mark up gap insurance by 200 to 300 percent compared to independent providers,” personal finance expert Andrew Lokenauth says. “And don’t forget to check if your regular auto insurance company offers gap coverage – they might give you a sweet discount.”
2. Consider coverage limits, the policy length and cancellation policies.
“Understanding gap insurance policy specifics is critical,” says Steven Kibbel, a certified financial planner. “Some policies cap the maximum payout, which could leave you covering the rest of your loan out of pocket if your car is totaled. Coverage duration is another factor – some policies only cover the first few years of a loan, leaving you vulnerable later. Exclusions and limitations can also be tricky, such as mileage restrictions or specific types of damage that are not covered. Reading the fine print matters here.”
3. Avoid cancellation fees
Dennis Shirshikov, a professor of finance and economics at City University of New York/Queens College, stresses the importance of understanding what happens if you want to cancel the policy.
“Ideally, you want to avoid penalties or fees if you need to terminate the policy prematurely,” he says. “Having extra flexibility in a gap insurance policy allows you to adjust coverage as your circumstances change, such as refinancing your car loan or paying it off early.”
4. Determine if the gap policy will cover your insurance deductible if the vehicle is written off or stolen.
Again, reading the fine print is key.
Sophie’s wise words
If your insurer doesn’t offer gap coverage, you still have good options. Stand-alone providers like EasyCare charge a one-time fee of $150 to $300 — significantly less than the $500 to $700 most dealers charge, with no interest added.
Frequently Asked Questions: Gap insurance
Can you buy gap insurance at any time?
You can usually purchase gap insurance for a new or used vehicle as long as the loan or lease remains unpaid. However, specific insurers might impose a restricted timeframe within which coverage can be obtained.
Does GEICO offer gap insurance?
Currently, GEICO does not offer gap insurance.
Is gap insurance available for used cars?
Yes, gap insurance is an option for used cars. However, if you have a used vehicle, it’s a good idea to do the math and ensure this type of coverage makes financial sense. If your car isn’t worth much, you might want to skip it. Gap insurance may only be available on newer vehicles; some used vehicles may be too old to qualify.
What primary insurance coverage must I have to carry gap insurance?
To buy gap insurance, you must have collision coverage (which pays for damage from at-fault accidents) and comprehensive coverage (which covers non-collision events like theft, vandalism, and weather damage). A liability-only policy won’t qualify, because it includes no coverage for the loss of your car.
When doesn’t gap insurance make sense?
If you own your car free and clear, you don’t need gap insurance, as it’s only for financed or leased vehicles. Also, if you made a significant down payment on your vehicle or you owe less on your loan than your car’s actual cash value, a gap policy isn’t worth it.
Key takeaways
Your auto insurer almost always offers the best gap insurance value. A car insurance company you already work with typically will offer the most affordable gap insurance, especially when you bundle it with your existing policy. Compare at least three providers, confirm cancellation terms upfront and cancel once you no longer need the policy.
Resources & Methodology
Sources
- Federal Reserve. “Consumers and GAP protection on vehicle financing contracts.” Accessed March 2026
- Kelley Blue Book. “How to beat car depreciation.” Accessed March 2026
- National Automobile Dealers Association. “Consumers and Guaranteed Asset Protection on Vehicle Loans and Sales-Financing Contracts.” Accessed March 2026
- Consumer Financial Protection Bureau. “What is Guaranteed Asset Protection insurance?” Accessed March 2026
Methodology
CarInsurance.com commissioned Quadrant Information Services to get car insurance rates. The rates are based on the sample profiles of 40-year-old male and female drivers carrying full coverage policies with limits of 100/300/100 and $500 collision and comprehensive deductibles. Read the detailed methodology for more information.
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