Melanie Musson is the fourth generation in her family to work in the insurance industry. She grew up with insurance talk as part of her everyday conversation and has studied to gain an in-depth knowledge of state-specific car insurance laws and dynamics as well as a broad understanding of how insurance fits into every person’s life, from budgets to coverage levels. She also specializes in automa...

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Dan Walker graduated with a BS in Administrative Management in 2005 and has been working in his family’s insurance agency, FCI Agency, for 15 years (BBB A+). He is licensed as an agent to write property and casualty insurance, including home, auto, umbrella, and dwelling fire insurance. He’s also been featured on sites like Reviews.com and Safeco. He reviews content, ensuring that ex...

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Reviewed by Daniel Walker
Licensed Car Insurance Agent for 15 Years

UPDATED: Feb 15, 2012

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If you are looking to find out “how much is GAP insurance”, it means you may need it. You may even already have it but want to find out if your rates could be cheaper. With the price of everything these days seeming so expensive, it is good to know you may even be able to save money on your auto insurance rates. The first thing to determine is what exactly GAP car insurance is and then you will know if you need it or not.

The basics of GAP auto insurance:

  • GAP stands for Guaranteed Auto Protection. It does however take care of “gaps” in your policy coverage. The bottom line is that GAP car insurance is meant to cover the difference between the value of a car and the amount of a loan.
  • When you finance or lease a vehicle, as soon as you drive it off the lot there is a certain amount of depreciation. What you owe on the car and what the value of the car is will be different. So if your insurance should need to cover the entire car it will only cover what the vehicle is valued at. The difference there is what you would still have to pay out of your own pocket and can easily be thousands of dollars.
  • When would this be important to have? If you have an accident in which the car is damaged beyond being worth the expense of repair the car will be totaled out. If this should happen you will be paying the difference between value and loan amount. In addition, if the car is stolen and unable to be recovered the same situation applies. You could be paying for a car that you can’t even have or drive.

Am I a Candidate?

There are plenty of instances when drivers need GAP insurance coverage. The problem is they may not always realize it and therefore lack coverage. See if any of these apply to you then you can worry about how much is GAP insurance.

  • If you finance or lease a new vehicle, you almost always need it, at least in the early stages of the loan. It is important during this time because the amount of the loan is going to be greater than the true value of the vehicle.
  • Depreciation is also a factor however. If the vehicle you buy is known to depreciate you may also need or be required to carry GAP auto insurance coverage. In fact, if you know you may be the reason the car will depreciate quickly it would probably be a good idea to go ahead and secure this type of policy. One good example of a driver causing the car to depreciate quickly is putting a lot of miles on it per year. Depreciation means that the value of the car will go down even more and rather quickly even though you owe more than it is worth with the loan.
  • If you brought in a car for trade that you still owed on you probably need GAP insurance. Or if you had less than 20 percent to put down on the loan you also probably need this. The best thing to do is determine if you are paying more than the car is worth and this should be an indicator of whether or not you need GAP car insurance.

Now, how much is GAP insurance?

First and foremost, getting quotes from insurance policy providers will be the best way to see that an affordable policy does exist. Even if you already have GAP auto insurance you could probably be saving a great deal on your premium rates. Of course, there are other thing to take into consideration when determining how much your GAP car insurance coverage could be.

  • You zip code – Yes, even the area within the state where you live can play a big role in what your rates will be. You could live somewhere that is much lower in crime or is known to have a low amount of accidents. For these reasons, your auto insurance premiums will be impacted.
  • Your car and loan amount – The amount of the GAP between the car loan amount and the value is obviously a big contributing factor to rate costs. The type of car will also affect car insurance rates in general. An expensive red, convertible will be a higher insurance risk and cost more than a family van with all the safety features possible.
  • Your driving and insurance history – For auto insurance premiums in general there are so many details that can influence the amount of your premium rates. Obviously the cleaner your driving record the lower the rates. If possible, avoid tickets and do not take risks that could increase your likelihood of an accident. You must also maintain auto insurance to keep your rates low. Drivers who have a lapse in coverage of more than 30 days are most likely going to see a spike in their premium rates. Keep yourself covered even in times when you may just be using another person’s car occasionally so that you have affordable rates all the time.
  • Your loan terms – If you have a car loan that is for a period of 60 months or more, your rates could be higher for GAP insurance. In addition, if you get that loan with the upside down trade on top of the loan you will need more extensive GAP auto insurance coverage. These are all things that influence what your rates will be.

In order to make sure you get the best premium rates possible you must use quote comparisons to make that happen. It is as simple as entering your zip code and having the quotes come to you. By doing this you will find out how much is GAP insurance for your individual situation.