Average cost of gap insurance in 2026

Gap insurance, sometimes called loan or lease coverage, helps if your car is totaled or stolen while you still owe money on it. It covers the “gap” between what the car is worth and what you still have to pay. The extra cost is small — about $88 a year on average — bringing the total cost of car insurance with gap coverage to around $2,908 a year. Big insurers like State Farm, Progressive, and Allstate usually offer it for less than $100 annually.

What is gap insurance and who needs it?

Gap insurance covers the difference between what your car is worth and what you still owe on your loan or lease if it’s totaled or stolen. It’s most useful for drivers who lease, make small down payments, or have long loan terms, since those situations often leave you owing more than the car’s value. If you own your car outright or owe less than it’s worth, you probably don’t need it.

“When an accident or theft occurs, a driver usually gets paid out on the vehicle’s cash value from their standard insurance coverage,” says Richard Howe, owner of Howe Law, a law firm representing personal injury cases in Atlanta. “However, without gap insurance, you will still be on the hook for the remaining amount in your agreement. Gap insurance provides peace of mind to drivers that they will be financially protected.”

How does gap insurance work?

If your car is totaled or stolen, your standard insurance only pays the vehicle’s actual cash value, not what you still owe on the loan or lease. That’s where gap insurance steps in — it covers the leftover balance so you’re not stuck making payments on a car you can’t drive.

“For instance, let’s say your car is totaled and the actual cash value is determined to be $15,000. However, you still owe $20,000 on your loan. Traditional auto insurance would only cover up to the actual cash value, leaving you with a $5,000 deficit,” says Howe. “But if you have gap insurance, this difference would be covered.”

Estimate gap insurance rates in your state

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We only have Gap insurance rate data for 43 states; therefore, some states are missing from the list.

Florida

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• The average annual cost of a gap insurance policy in Florida is $2,757.
• With an annual rate of $2,288, Nationwide is the cheapest option in Florida.

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What gap insurance covers

Gap insurance comes into play when your car is totaled or stolen, and the insurance payout doesn’t cover what you still owe. Here’s what it does:

• Covers the “gap” between your car’s value and your loan or lease balance. If your car is declared a total loss, gap insurance pays the difference between your vehicle’s actual cash value (ACV) and what you still owe.
• Applies only in cases of total loss. Gap coverage only kicks in if your car is totaled in an accident or is stolen and not recovered. It doesn’t apply to partial damage or repairs.
• Helps you avoid paying out of pocket. Without gap insurance, you’d be responsible for covering the shortfall between the insurance payout and your outstanding loan or lease amount.

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What doesn’t gap insurance cover? 

While gap insurance can save you from a major financial hit, it doesn’t cover everything. Here’s what it won’t pay for:

• Repairs if your car isn’t totaled. Gap insurance only applies when the vehicle is a total loss, not for damage from minor accidents.
• Loan balances from previous vehicles. If you rolled an old auto loan into your new one, gap coverage won’t pay off the remaining balance of the prior loan.
• Add-ons like extended warranties or service contracts. Any extras included in your financing aren’t covered.
  

For example, you trade in a car but still owe $3,000. You roll that debt into a new $20,000 car loan, making your total loan $23,000. A week later, your new car is totaled. The car’s actual cash value is $16,000. Your gap insurance would cover the $7,000 difference between what it’s worth and what you owe — except for the $3,000 from your previous loan, which you’d still have to pay out of pocket.

How much is gap insurance?

The amount you’ll pay for gap insurance varies based on factors such as your insurance provider, the make and model of your vehicle, the size of your loan or lease, and even the state where you live. On average, adding gap coverage brings the total cost of a car insurance policy to about $2,908 per year, with gap itself making up only about $88 annually.

Here’s a look at how rates vary nationwide with gap insurance.

Gap insurance rates for different vehicle types 

The type of vehicle you drive can significantly impact your gap insurance rate.

“Luxury cars, sports cars, and SUVs – typically with higher purchase prices – might also come with higher gap insurance premiums. That’s because these vehicles tend to depreciate at different rates compared to standard sedans or compact cars, posing a greater risk to insurers,” Howe says. 

The insured vehicle’s age will also play a role in calculating gap insurance rates.

“Newer vehicles, which depreciate more rapidly in the first few years, represent a higher risk for insurers offering gap coverage. As a result, a brand-new car might attract a higher gap insurance premium compared to a model that is several years old,” Howe says. “This reflects the insurer’s risk assessment, considering the steeper depreciation curve and the greater likelihood of a significant gap needing coverage soon after the purchase.”

Gap insurance cost by company

The cost of gap coverage can vary by provider. One company may offer gap coverage for hundreds or even thousands less than another insurer. For example, USAA’s gap coverage averaged $1,047 per year. By contrast, coverage through CSAA Insurance was $6,302 — more than six times USAA’s rate. It’s wise to shop around. 

Here’s what you can expect to pay with gap coverage included on a standard policy:

Gap insurance cost by different age groups

As with other forms of car insurance, gap coverage is usually more expensive for younger, more inexperienced drivers since they’re statistically more likely to be involved in an accident. For example, a male teen driver will pay an average of $10,764 for gap insurance, while a male senior will pay just $2,624. 

Here are the average gap insurance rates by age group, based on coverage added to a standard auto policy:

How gap insurance saved these drivers thousands

Gap insurance can make a huge financial difference after a total loss. The following stories show how valuable this coverage can be when you need it most.

Several years ago, Jeremy and Rosaline purchased a pre-owned Chevy Trailblazer. The vehicle was a year old, and the dealer offered to sell them gap coverage for $500. They declined, believing it wasn’t necessary for a used vehicle.

The couple drove the vehicle for about a year, and then Jeremy was in a head-on collision that totaled the vehicle and landed him in the hospital. They owed about $9,000 more on the Trailblazer than their insurance company valued the SUV.

In their case, another driver was at fault for the accident, and the other party eventually compensated them for the $9,000. However, it required a lengthy court case, and the couple had to continue making monthly payments until a settlement was received.

For another example, consider Leslie’s case. She purchased a new Honda Odyssey, and her insurance agent suggested she add loan gap coverage to her policy. It cost $19 a month, but Leslie felt it was a smart move since she hadn’t put much down on the van.

Shortly after buying the van, Leslie was driving on a country road when a deer darted out in front of her. She swerved, went off the road, and hit a tree. She walked away from the accident with only minor injuries, but her insurer considered the van a total loss.

Since she had purchased the optional gap coverage, her insurer paid for the entire amount owed on her vehicle loan, even though it was $12,000 more than the van’s appraised value at the time of the crash.

How long does gap insurance last? 

Gap insurance is a good idea for as long as you’re still paying off a loan or lease, helping cover the difference between what you owe and your car’s depreciated value until you owe less than the car is worth.

“[How long you should have] gap insurance coverage can vary based on several factors, including where you purchase the policy, the terms of your financing or lease agreement, and the specific policies of your insurance provider,” Howe says. “However, gap insurance is typically most relevant during the first few years of new car ownership.” 

This is when the gap between what you owe and your car’s decreasing value is widest.

“Most car buyers benefit from gap insurance when the vehicle is less than three model years old. This coverage is usually aligned with the duration of the car loan or lease, often making it unnecessary beyond a few years because the loan balance decreases to fall below the car’s actual cash value,” Howe says.

You can cancel gap coverage whenever you feel it’s no longer needed — usually once your loan balance is lower than your car’s actual cash value. Howe points out that some insurers automatically end gap coverage after a certain number of years since the car’s value will eventually exceed the loan balance, making it unnecessary.

When should you cancel gap insurance?

Gap insurance is designed to protect you while you owe more on your car loan or lease than the vehicle is worth. Once that gap closes, the coverage usually isn’t necessary anymore.

You can think about canceling gap insurance when:

• Your loan balance drops below your car’s current market value
• You’ve built at least 20% equity in the vehicle
• You’ve paid off your car loan completely
• You’re trading in or selling the car

Most insurers let you remove gap coverage mid-policy, and some dealerships may even refund a portion of the unused premium if you purchased it upfront. It’s a good idea to check your loan balance against your car’s value regularly so you know when the coverage has done its job.

Where to buy gap insurance

Many top auto insurers offer gap insurance or a similar product. If it’s not already included in your financing or policy, the monthly cost will depend on your location and vehicle.

State Farm 

State Farm offers a program called Payoff Protector, which functions much like gap insurance for vehicles financed through State Farm Bank. While it isn’t technically an insurance product, it provides similar protection: if your car is declared a total loss and your loan is in good standing, 

State Farm will cover the difference between your insurance payout and the remaining loan balance. Payoff Protector automatically applies to all vehicles financed and used as collateral through State Farm Bank.

Progressive

Progressive provides loan/lease payoff coverage, a product that works similarly to gap insurance. The key difference is that coverage is usually capped at up to 25% of your vehicle’s value, though limits can vary by state. 

If your car is totaled or stolen and your insurance payout doesn’t fully cover what you still owe on your loan or lease, this coverage helps pay the remaining balance — up to that 25% cap.

Allstate

You can purchase gap insurance through Allstate, but it must be added at the time you finance your car — it can’t be applied retroactively to a vehicle you already own. The coverage is available for both new and used vehicles financed for up to 96 months. 

Allstate’s gap product also includes up to $1,000 toward your primary auto insurance deductible and will cover as much as $50,000 of your remaining loan balance if your car is declared a total loss. The cost is relatively low, typically ranging from $10 to $50 per year depending on your vehicle and location.

USAA

USAA provides a similar option to gap insurance called Car Replacement Assistance. If your vehicle is declared a total loss, USAA will pay an additional 20% above the car’s actual cash value (ACV). 

Unlike gap coverage, the payment goes directly to you — not your lender — so you can decide how to use the funds. However, this protection isn’t available for leased vehicles. To qualify for USAA coverage, you or an immediate family member must be active military, a veteran, or a family member of one. 

The cost of Car Replacement Assistance typically ranges from $10 to $50 per month, depending on your state and vehicle.

Is gap insurance worth it?

Gap insurance is recommended so long as you have a loan or lease where there is a difference between what is owed and the depreciated value of your vehicle, according to Triple-I’s Friedlander. 

He recommends considering purchasing gap insurance if you have made less than a 20% down payment on your vehicle, financed the purchase for 60 months or longer, are leasing the vehicle (gap insurance may actually be required under the terms of a lease agreement), or have rolled over negative equity from an old car loan into a new loan. 

According to Friedlander, it’s worth considering gap coverage if:

• You put less than 20% down when buying your car
• You took out a loan that’s 60 months or longer
• You’re leasing your vehicle (in fact, many leases require it)
• You rolled old loan debt into your new car loan

Gap insurance makes the most sense when you’re at risk of owing more than your car is worth. If you’ve paid off most of your loan or own your vehicle outright, you can probably skip it.

Methodology

We collected the above rate information for gap coverage by requesting quotes from major insurers. The average rates are based on male and female drivers, 40 years of age, in every state, who own a 2023 Honda Accord LX. Companies were selected based on their availability, financial stability, customer service, and average rates. 

How much does gap insurance cost in each state?

Gap insurance helps cover the difference between what you owe on your car loan and what your car is worth if it’s totaled — so you’re not stuck paying that gap out of pocket. Gap insurance tends to be pretty affordable, but how much you actually pay depends on where you live, who you're insured by, and your loan amount.

Alabama$1,940/Year

Arizona$1,916/Year

Arkansas$2,043/Year

California$2,510/Year

Colorado$2,495/Year

Connecticut$1,800/Year

Delaware$2,132/Year

Florida$2,757/Year

Georgia$2,023/Year

Idaho$1,496/Year

Illinois$1,613/Year

Indiana$1,588/Year

Iowa$1,669/Year

Kansas$1,990/Year

Kentucky$2,336/Year

Maine$1,229/Year

Maryland$1,841/Year

Massachusetts$1,783/Year

Michigan$2,501/Year

Minnesota$1,998/Year

Mississippi$2,095/Year

Missouri$2,186/Year

Montana$2,390/Year

Nebraska$1,989/Year

Nevada$2,146/Year

New Hampshire$1,327/Year

New Jersey$1,975/Year

New Mexico$2,103/Year

North Dakota$1,715/Year

Ohio$1,503/Year

Oklahoma$2,242/Year

Oregon$1,742/Year

Pennsylvania$1,984/Year

Rhode Island$2,144/Year

South Dakota$2,375/Year

Tennessee$1,752/Year

Texas$2,113/Year

Utah$1,900/Year

Vermont$1,384/Year

Virginia$1,538/Year

Washington$1,658/Year

West Virginia$2,040/Year

Wisconsin$1,760/Year

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