March 25, 2025
Auto Insurance
How Much Is Gap Insurance?
GAP Insurance (Guaranteed Asset Protection) covers the difference between what your standard car insurance pays and what you still owe on your loan if your vehicle is stolen or totaled in an accident. This optional add-on insurance coverage is crucial for financed or leased vehicles. So, of course, if you don’t have it in the event of theft or total loss, you might have to pay thousands of dollars out of pocket to settle your car loan. But how much does GAP coverage actually cost?
In this article, we’ll provide you with an estimated cost of GAP coverage if you buy it from a car dealership, insurance company, or lender. We’ll also share the average cost of GAP insurance, state-by-state prices, and key factors affecting GAP coverage costs.
Related Article: What is Gap Insurance?
How Much Does Gap Insurance Cost?
Over 80% of new cars purchased in 2024 had financing, according to Statista. So, it has become one of the most frequently asked questions for many U.S. drivers: How much do they have to pay if they decide to get GAP insurance coverage?
The answer is it depends. But one thing is certain. It’s surprisingly cheaper if you purchase it from auto insurers. According to the Insurance Information Institute (III), you’ll pay only $20 a year for the gap insurance if you buy it as an add-on with comprehensive and collision insurance coverage. This means you pay less than $2 per month for gap insurance.
Another research from Insure.com tells us that if you purchase it from the top insurers, the average cost of GAP insurance is $7.50 per month or $90 per year. Forbes Advisor’s analysis says the average cost of GAP insurance is $61 per year. Other studies we found reveal GAP insurance typically costs $20 to $40 per year.
So, based on our research, the average gap insurance cost in 2025 ranges from $20 to $100. But this is only true if you decide to buy it from car insurance companies. In case you get it from a car dealership or lender, you’ll have to spend approximately 100% to 250% more.
How Much Is Gap Insurance Through a Dealership?
As we mentioned, buying gap insurance from a car dealership or lender can be expensive. It typically costs between $400 and $700 as a flat rate. However, dealerships often roll the cost into your loan, meaning you’ll pay interest on it. This increases the total amount you spend over time. In fact, this rate can go as high as $1,500 depending on your chosen dealership or financial institution. In contrast, adding gap coverage to an auto insurance policy usually costs $20 to $100 per year, which is a more affordable option.
Gap Insurance Cost Comparison Based on Providers
Let’s say you have purchased a new car on an auto loan. If you financed 80% to 90% of your vehicle’s value, lenders recommend carrying GAP insurance.
Now let’s calculate the cost of GAP insurance based on providers.
If you choose to get GAP insurance from auto insurance companies, on average, you’ll pay a maximum of $100 per year. Typically, GAP coverage lasts two to three years, depending on your loan amount and loan terms.
Let’s say you have to pay off your loan within two years. This means you’ll carry GAP insurance for two years at most. Consequently, you’ll pay a maximum of $200 for GAP insurance if you buy it from insurance companies.
On the other hand, if you buy it from a dealership or lender, they will charge a one-time fee of $400 to $700. This means you will pay double the amount for GAP coverage compared to purchasing it from an auto insurer.
The following table compares the costs of GAP insurance based on the providers:
Provider | Average Cost | Percentage Increase Over Insurance Companies |
Car Insurance Companies | $200 (for a total two-year loan term) | 0% |
Car Dealership | $400 to $700 | 100% to 250% |
Lenders | $500 to $700 | 150% to 250% |
Related Article: When Does Gap Insurance Not Pay?
Average Cost of Gap Insurance: State-by-State
GAP insurance costs can vary based on where you live. In addition, the vehicle’s value, loan or lease amount, make and model, and insurance provider also affect the costs of GAP coverage.
The following table shows the cost of GAP insurance by state and the annual full coverage car insurance cost after adding GAP insurance:
State | Average GAP Insurance Add-On Cost | Average Cost of Full Coverage + GAP Insurance |
Alabama | $86 | $2,165 |
Alaska | $95 | $2,497 |
Arizona | $99 | $2,838 |
Arkansas | $88 | $2,577 |
California | $95 | $3,030 |
Colorado | $158 | $3,370 |
Connecticut | $103 | $2,771 |
Delaware | $68 | $2,964 |
Florida | $50 | $4,260 |
Georgia | $51 | $3,027 |
Hawaii | $50 | $1,755 |
Idaho | $62 | $1,535 |
Illinois | $79 | $2,521 |
Indiana | $72 | $1,823 |
Iowa | $40 | $1,918 |
Kansas | $89 | $2,649 |
Kentucky | $102 | $2,957 |
Louisiana | $91 | $4,089 |
Maine | $52 | $1,703 |
Maryland | $92 | $2,924 |
Massachusetts | $58 | $2,124 |
Michigan | $147 | $3,308 |
Minnesota | $88 | $2,669 |
Mississippi | $85 | $2,435 |
Missouri | $205 | $2,812 |
Montana | $210 | $2,632 |
Nebraska | $86 | $2,488 |
Nevada | $85 | $3,745 |
New Hampshire | $61 | $1,904 |
New Jersey | $72 | $3,010 |
New Mexico | $54 | $2,249 |
New York | $192 | $4,285 |
North Carolina | $101 | $2,058 |
North Dakota | $50 | $1,860 |
Ohio | $84 | $1,866 |
Oklahoma | $102 | $2,851 |
Oregon | $61 | $2,157 |
Pennsylvania | $111 | $2,547 |
Rhode Island | $81 | $2,620 |
South Carolina | $101 | $2,071 |
South Dakota | $90 | $2,396 |
Tennessee | $75 | $2,165 |
Texas | $69 | $2,642 |
Utah | $72 | $2,200 |
Vermont | $65 | $1,571 |
Virginia | $72 | $2,233 |
Washington | $61 | $1,919 |
West Virginia | $40 | $2,264 |
Wisconsin | $100 | $2,050 |
Wyoming | $61 | $1,820 |
Washington, D.C. | $84 | $3,100 |
GAP coverage prices vary by state, just as shown in the above table. For instance, drivers in Montana pay the highest rate of $210 for GAP insurance, while drivers in West Virginia pay only $40.
Please note that the rates could vary. So, please check with your insurance company before you add GAP coverage to your full coverage policy. Usually, if you financed your vehicle, full coverage car insurance is mandated by your lender. That’s why we have included the total cost of full coverage and GAP insurance add-on in the above table for your convenience.
If you need to add gap insurance to your existing auto policy, you can find an insurance agent. L.A. Insurance offers the cheapest gap insurance. Our insurance services extend to not only Michigan but also Colorado, Texas, Florida, Arizona, Nevada, and Georgia. Get a cheap gap insurance quote today!
Learn More: Do You Need Full Coverage on a Financed Car?
Factors That Affect Gap Insurance Cost
The cost of GAP insurance isn’t fixed. It depends on several factors, such as your vehicle, loan, and where you buy coverage. Some factors can make your insurance policy cheaper, while others may increase the price.
- Vehicle Price and Depreciation: According to Kelley Blue Book (KBB), vehicles are expected to lose 20% of their original value by the first year due to depreciation. If you have an expensive car, or a vehicle that loses value quickly, it could lead to higher GAP coverage costs. This is because depreciation increases the negative equity gap.
- Loan Amount and Term: A larger loan or a long repayment period raises GAP insurance costs. The longer you owe money, the higher the risk for insurers.
- Providers: If you buy gap insurance from an auto insurance company, the rate is comparatively cheaper. However, the car dealership or lender offers an expensive flat rate around $400 to $700. This can go up to $1,500 in some cases.
- Type of Insurance Policy: You need full coverage insurance, which includes liability insurance, collision insurance, and comprehensive car insurance coverage to qualify for GAP Insurance. Without it, insurers generally don’t offer this add-on.
- Credit Score and Driving History: A low credit score or bad driving history (e.g., accidents, speeding tickets, DUIs) increases car insurance rates. And GAP insurance isn’t an exception. Insurers consider these factors when determining risk.
- State and ZIP Code: GAP Insurance costs vary by location. For example, in West Virginia, it might be $40 per year, while in Montana, it could be $210 per year.
Where to Buy GAP Insurance?
With variations in costs, you can buy GAP Insurance from several providers. The best options include:
- Car Insurance Companies: Most affordable, around $20-$100 per year.
- Car Dealerships: Expensive, with a flat rate of $400-$700.
- Lenders: Typically, $500-$700, often added to your loan with interest.
If you financed your vehicle, you would need a full coverage policy. Plus, to include GAP insurance, insurers usually require you to have a full coverage policy first. You can get affordable full-coverage auto insurance from L.A. Insurance. We’re the most affordable insurance agency for both full coverage and GAP policies. Contact our insurance agent or get a free auto insurance quote online right away and get insured from the comfort of your home. For general inquiries, call us at (800) 893-9393.
Also Learn: Can I Cancel Gap Insurance?
Is It Worth Purchasing GAP Insurance Coverage from an Auto Insurer?
Buying GAP coverage from an auto insurance company is often the best choice. It usually costs less than buying it from a car dealership or lender. You can also avoid paying interest. Besides, you can combine it with a full coverage insurance policy, which will lower your car insurance rates.
Average GAP Insurance Cost in 2025: The Bottom Line
To sum up, GAP insurance costs between $20 and $100 per year. The price varies based on factors like your vehicle's value, loan amount, insurance provider, etc. If you buy it from a lender or car dealer, the cost can rise to about $400 to $700. That’s why, we recommend buying GAP insurance from a car insurance company, as it is usually the most affordable option. Make sure to compare car insurance rates to find the best deal.
Frequently Asked Questions (FAQs)
What Is Gap Insurance and How Does It Work?
Gap insurance covers the amount you owe on your car loan if your vehicle is totaled or stolen. For example, if your car is worth $25,000 but you still owe $30,000, your standard insurance will only pay $25,000. Gap insurance will cover the remaining $5,000 that you owe.
Can I Get a Refund If I Don’t Claim for Gap Insurance?
Yes, both car dealerships and auto insurance companies can give you a refund if you cancel gap insurance. This is possible only if your loan or insurance policy does not say it is non-refundable. Typically, car insurers take 4 to 6 weeks to process a refund. If you bought gap insurance from a dealership, it may take up to 90 days for your refund.
How Much Is the Gap Insurance Refund?
It depends. If you purchased a gap insurance policy for $600 that covers 24 months and you decide to cancel it after 12 months, you will get a refund of $300. If there are any additional fees or penalties, the gap insurance provider may deduct them from this amount.
Who Needs Gap Insurance?
Anyone with a loan or lease on a vehicle may need GAP insurance. If your car’s actual cash value is lower than what you owe, GAP coverage helps. Besides, it’s particularly useful for high-depreciation vehicles or small down payments.
How Much Is Gap Insurance Per Month?
It depends on where you buy it. From an insurance company, it costs about $2 to $20 per month. If you purchased it from one of the top insurers, it might cost you on average $7.50 per month. However, from a car dealership, you’ll pay a flat rate of $400–$700, often adding interest to your loan.
How Much Do You Have to Pay for Full Coverage with Gap Insurance?
The total cost depends on several factors such as your policy, vehicle value, ZIP code, loan amount, driving record, and claim history. Adding GAP insurance to a full coverage plan usually raises your payment by $20 to $100 each year. For example, the national average cost for full coverage auto insurance is $2,100 per year. If GAP insurance adds $90, the total cost for full coverage with GAP insurance will be $2,190 annually.
How Much Do Drivers Pay for Gap Insurance in Florida?
In Florida, GAP coverage typically costs $50 per year. However, your cost varies based on your vehicle insurance, credit score, and insurance company. So, you should compare auto insurance quotes to find the best deal.
When Is Gap Insurance Recommended?
GAP insurance is recommended when you owe more than your vehicle’s actual cash value. It’s useful if you made a low down payment, have a long loan term, or own a car with high depreciation. Besides, many lenders require it for financing. You can ask your insurance agency or lenders whether they recommend it or not.
What Is the Cost of Gap Insurance in Michigan?
In Michigan, GAP insurance costs about $147 per year from the car insurance company. If you purchase it from a dealership, it may cost you around $500 to $700. However, the rates vary based on your providers, vehicle value, and loan balance. So, you better compare car insurance rates for the best option.
How Much Does Gap Insurance Cost in Texas?
In Texas, GAP coverage costs about $69 a year on average if included as an add-on. If you buy it from a dealership, prices usually range from $500 to over $1,000. Dealerships can charge up to 5% of the loan value for GAP coverage. Also, if you buy it from the vehicle manufacturer, it costs on average $450. This means that getting GAP coverage from an auto insurance provider is often cheaper than buying it from a car dealership, lender, or car manufacturer. However, your actual cost may vary based on your insurance policy, the company you choose, and your vehicle's actual cash value.
How Is Gap Insurance Calculated?
It’s based on your loan balance, the vehicle’s actual cash value, and the depreciation rate. Also, insurance companies consider your ZIP code, credit score, and insurance policy details. Besides, dealerships and lenders charge higher fees, often adding interest to your payment.
References:
- Cumbrera, F. de Q. (n.d.). Share of used and new cars financed U.S. 2024 | Statista. Retrieved March 11, 2025, from https://www.statista.com/statistics/453000/share-of-new-vehicles-with-financing-usa/
- What is gap insurance? | III. (n.d.). III | We Are the Trusted Source of Unique, Data-Driven Insights on Insurance to Inform and Empower Consumers. Retrieved March 11, 2025, from https://www.iii.org/article/what-gap-insurance
- Martin, E. (2024, August 1). Average cost of gap insurance in 2025 | Insure.com. Insure.Com. https://www.insure.com/car-insurance/gap-insurance-cost/
- Metz, J. (2023, September 18). Gap Insurance: What It Is And How It Works – Forbes Advisor. Forbes Advisor. https://www.forbes.com/advisor/car-insurance/gap-insurance/
- Progressive Corporation. (n.d.). What Is Gap Insurance and How Does It Work? | Progressive. An Insurance Company You Can Rely On | Progressive. Retrieved March 12, 2025, from https://www.progressive.com/answers/gap-insurance/
- Hardesty, C. (2024, October 17). How To Beat Car Depreciation - Kelley Blue Book. Kelley Blue Book; https://www.facebook.com/kbb/. https://www.kbb.com/car-advice/how-to-beat-car-depreciation/
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What Happens If You Don't Have Car Insurance
Driving without insurance is risky. It can lead to fines, vehicle impoundment, license suspension, and even jail time. Worse, an accident without insurance could leave you paying massive medical bills, and property damage out of pocket.
How Much Is Gap Insurance?
GAP Insurance (Guaranteed Asset Protection) covers the difference between what your standard car insurance pays and what you still owe on your loan if your vehicle is stolen or totaled in an accident. This optional add-on insurance coverage is crucial for financed or leased vehicles. So, of course, if you don’t have it in the event of theft or total loss, you might have to pay thousands of dollars out of pocket to settle your car loan. But how much does GAP coverage actually cost?
What Is Gap Insurance?
So, what is gap insurance coverage? When you buy a car with a loan, the value of it drops quickly over time. And unfortunately, if an accident totals it, standard auto insurance covers only its actual cash value (ACV). But what if you owe more? That’s where gap coverage helps. For example, you owe $30,000, but your full coverage auto insurance pays you $26,000 after depreciation. Gap insurance covers the $4,000 difference.
When Does Gap Insurance Not Pay?
Gap insurance (short for Guaranteed Asset Protection Insurance) helps cover the difference between what you owe on a car loan and the vehicle’s actual cash value if it’s totaled or stolen. However, many drivers have numerous questions about this policy, one of the most common being the circumstances under which gap insurance does not pay or provide coverage. It doesn’t pay for partial damage, a lapsed policy, or if you have missed payments. It also won’t cover negative equity from a previous loan, fraud, intentional damage, or damages caused by activities like ride-sharing.
What Is Liability Auto Insurance and What Does It Cover?
If you have a car, there’s no alternative to understanding liability car insurance coverage. It protects you from financial losses if you’re at fault in an accident. If you hit someone else's car on the road, it may cause property damage, severe bodily injury, or both. In such a case, the other driver may also sue you depending on the severity of the damage, which will add up to legal expenses. But who will pay for these expenses? The answer is auto liability insurance. So, what does auto liability insurance cover and what does it leave out? Any guesses?
Can You Cancel Gap Insurance?
Sometimes canceling GAP insurance is crucial for those with auto loans or leases. GAP insurance covers the difference between your car’s value and the amount owed on a loan or lease after a total loss. If you've recently purchased a car with financing, you may have already purchased GAP insurance. However, if you've paid off your loan early or plan to sell your car, you might be wondering: Can I cancel GAP insurance and get a refund? In this article, we'll explore what GAP insurance is, how to cancel it, and request refunds.
