Car Insurance Can you get gap insurance on a used car? Yes, you can get gap insurance on a used car, but eligibility often depends on the vehicle’s age, mileage, and whether it’s financed. View Carriers Please enter valid zip Compare top carriers in your area Written by Kat Tretina Kat Tretina Kat Tretina is an insurance expert and freelance writer specializing in personal finance and insurance. Her work has appeared in top publications like U.S. News, Money.com and The Wall Street Journal’s Buy Side. She helps readers make informed decisions about money, budgeting and car insurance. | Reviewed by Nupur Gambhir Nupur Gambhir Nupur Gambhir is an insurance expert and managing editor of Insure.com. She specializes in life and health insurance content, and has experience as a marketing consultant. | Posted on: July 15, 2025 Why you can trust Insure.com Quality Verified At Insure.com, we are committed to providing the timely, accurate and expert information consumers need to make smart insurance decisions. All our content is written and reviewed by industry professionals and insurance experts. Our team carefully vets our rate data to ensure we only provide reliable and up-to-date insurance pricing. We follow the highest editorial standards. Our content is based solely on objective research and data gathering. We maintain strict editorial independence to ensure unbiased coverage of the insurance industry. Buying a used car can be a cost-effective alternative to buying new, but it’s still a significant investment. According to Kelley Blue Book, the average price of a used vehicle topped $25,000 as of July 2025. Thanks to that steep price tag, it’s no surprise that a large percentage of used cars are purchased with financing. While a used car rarely depreciates as quickly as a new car, its value can decrease over time. If you finance your car with a loan and it is totaled in an accident, that depreciation can cause issues — your vehicle may be worth less than you owe on your loan. That problem is where guaranteed asset protection — commonly known as gap insurance — can come in handy, covering the difference between your loan balance and your vehicle’s actual cash value.Gap insurance is optional coverage that helps protect you financially if your vehicle is totaled and you owe more on your loan than the car is worth. It bridges the “gap” between your vehicle’s actual cash value (ACV) and your remaining loan balance. “[Gap insurance] is a very reasonably priced product that adds great value to your coverage,” said Mark Friedlander, senior director of media relations with the Insurance Information Institute (Triple-I). Commonly used for new cars, gap insurance is also available for used vehicles. You can usually purchase gap insurance on a used car at the time of financing — either through the dealership, your insurance company, or a third-party provider — as long as the vehicle meets eligibility requirements. Most insurers only offer gap coverage for used cars that are less than three to five years old and have low mileage, and the vehicle must be financed (not paid in full). It’s best to buy gap insurance early in the loan term, when the risk of owing more than the car is worth is highest. How does gap insurance work for a used car? Gap insurance for a used car works the same way it does for a new vehicle: It covers the difference between what you owe on your auto loan and the car’s ACV if the vehicle is totaled or stolen. However, there are a few key considerations when applying gap coverage to a used car. To be eligible, the used car typically needs to be relatively new — often three model years old or newer — and must be financed with a loan. If your vehicle is declared a total loss, your insurer will calculate its current market value. Gap insurance pays the remaining balance on your loan if the value is less than what you owe. For example, if your used car is totaled and the insurer values it at $18,000 but your loan balance is $21,000, gap insurance would cover the $3,000 difference (minus your deductible, if applicable). Some insurers may have additional restrictions for used cars, such as mileage limits or specific loan-to-value (LTV) thresholds. It’s important to read the terms carefully or speak with an insurance representative before purchasing. When is gap insurance worth it for a used car? Gap insurance is helpful for some used car buyers, but it’s not necessary for everyone. Here’s when gap insurance can be a smart move for a used car: You had a small down payment While experts generally recommend a down payment of 20%, many borrowers put down much smaller amounts. If you had a smaller down payment, such as 10%, you’re at a greater risk of owing more than the vehicle is worth. Gap insurance can protect you if your car is stolen or totaled in an accident. You selected an extended loan term The average loan term for a used car is 67 months, but some lenders offer loan terms of 84 or even 96 months. Although opting for a longer term can be appealing because it gives you a smaller monthly payment, it also takes you more time to build equity, so you’re more likely to be underwater on your loan. With gap coverage, you have protection for the difference between your loan balance and your car’s value if it’s totaled. You purchased a luxury vehicle Statistically speaking, luxury cars depreciate faster than other vehicles. If you’re buying a used Jaguar, Porsche, BMW, or Maserati, you can expect faster-than-usual depreciation. Because of how quickly the value of these cars can decrease, there can be a large gap between the car’s value and your loan balance, so gap insurance can be particularly useful. How to decide if gap insurance is right for your used car loan When deciding whether it makes sense to get gap insurance for your used car, ask yourself the following questions: How much of a down payment do I have? If you have a down payment of less than 20% — in some cases, you can buy a car with 0% to 10% down — you’re more likely to have negative equity quickly. How many miles do I typically cover? If you spend a lot of time on the road due to a long commute or a heavy travel schedule, you may run up your car’s odometer. Putting a significant amount of miles on your car can cause its value to decrease faster, so gap coverage can come in handy. Do I have a safety net? If you have an emergency fund large enough to cover the difference between your car’s value and your loan balance, you may be able to skip gap insurance. But if your savings are limited, and you’d struggle to cover the difference, gap insurance can be well worth the investment. How old is the car I’m purchasing? Used cars usually have to be relatively new to qualify for gap insurance. “Typically, gap coverage is much easier to obtain for new cars versus used cars,” said Friedlander. “Many insurers restrict gap coverage on used vehicles to model years of three years old or less.” Pros and cons of getting gap insurance on a used car Like any type of insurance, gap coverage has its benefits and drawbacks. Before you add it to your policy or loan, consider the pros and cons to decide if it’s the right fit for your situation: ProsConsCovers negative equity in cases of total lossExtra costProvides peace of mindDealership-offered gap insurance may be priceyRelatively affordable add-onNot available from all insurers How much does gap insurance cost? Compared to other forms of car insurance, gap coverage is relatively affordable. On average, gap coverage costs about $90 per year or around $7.50 per month when added to an existing auto policy. However, prices can vary significantly depending on your location. For example, Iowa drivers pay as little as $39 per year, while Missouri drivers see some of the highest rates, averaging $204 annually. For drivers with a loan or lease, especially early in the term, gap insurance can help reduce the financial impact of a total loss. Where to buy gap insurance You can buy coverage from the following providers: Through a dealership: At the time of your vehicle purchase, you can usually include gap coverage with your loan and other add-ons, such as extended warranties or service contracts. If you opt for gap insurance through a car dealer, you can expect to pay a one-time fee of $200 to $700. As an add-on with your auto policy: If you have an existing auto insurance policy, you may be able to add gap coverage. Adding gap insurance to a current policy is relatively inexpensive. Through other insurers or third-party providers: If your insurer doesn’t offer gap coverage, you may be able to purchase it through another insurance company or third-party provider. Purchasing insurance from another company may be more expensive than adding gap insurance to a current policy, but it’s likely cheaper than buying it through a dealership. How long should you keep gap insurance on a used car? Gap insurance is designed to protect you while you owe more on your loan than the car is worth — also known as being underwater. When your loan balance drops below your car’s actual cash value, you no longer need gap insurance. For many borrowers, this point arrives around the halfway mark of the loan term, but it varies based on your down payment, interest rate, loan term, and how quickly your car depreciates. To determine if you’re still underwater, compare your loan payoff amount to your car’s estimated value using tools like Kelley Blue Book or Edmunds. If your car is worth more than what you owe, it’s safe to cancel your gap coverage — and in some cases, you may get a refund for unused premiums if you prepaid for the coverage. What are the alternatives to gap insurance? If gap insurance doesn’t seem like the right fit, a few other options can help you manage the risk of negative equity. Car replacement assistance protection: This reimburses you above your car’s actual cash value, such as 20% over the current value, so you can pay off your current loan and have a little extra to put toward a replacement vehicle. Extended warranties: While not a substitute for gap insurance, extended warranties can help cover mechanical breakdowns or repairs due to manufacturer defects. Loan or lease payoff coverage: Although loan or lease payoff coverage is similar to gap insurance, it’s not exactly the same. This form of coverage can help with the remaining balance of your loan if your vehicle is totaled, but this form of coverage often has caps or maximums. Extra loan payments: One way to combat depreciation is to make extra payments toward your auto loan so you build positive equity faster. Making additional payments will reduce the principal faster, so you’ll own the car free and clear quicker. Savings: If you have a strong emergency fund, you may be able to cover the difference between your loan balance and your car’s value on your own, making gap insurance less essential. Although gap insurance is most often associated with new vehicles, it can also be a valuable safety net for used car buyers. Used cars average over $25,000, and loan terms are longer than they’ve been in the past, so more drivers are at risk of negative equity, making them good candidates for gap coverage. Gap insurance is available for used cars and can be well worth the investment. If you opt for gap insurance, check with several providers for the best rates and terms. Frequently asked questions Can I get gap insurance after buying a used car? Depending on the make and year of your vehicle, you may be able to secure gap coverage after you buy a used vehicle. You can purchase gap coverage through your own insurance company or another provider. Is gap insurance required by lenders? In general, lenders cannot require you to purchase gap coverage. It’s an optional form of coverage you can purchase from any insurer of your choosing (or, you can skip it altogether). Can I cancel gap insurance if I don’t need it anymore? If you pay down your loan and your car’s value exceeds your balance, you can cancel your gap coverage at any time — and you may even be entitled to a refund of unused gap insurance premiums. Contact your insurer to notify the company you’d like to cancel. Can I get gap insurance from my car insurance company? Not all insurance companies sell gap insurance, so you may be unable to purchase gap coverage through your current insurer. Contact your insurance agent or customer support line to find out if gap insurance is available. Does gap insurance cover theft of a used car? Yes, gap insurance on used cars will cover the gap between your loan balance and your vehicle’s actual cash value if it’s stolen. Kat Tretina | . .Kat Tretina is an insurance expert and freelance writer specializing in personal finance and insurance. Her work has appeared in top publications like U.S. News, Money.com and The Wall Street Journal’s Buy Side. She helps readers make informed decisions about money, budgeting and car insurance. In case you missed it Best Car Insurance Companies of 2025 The most and least expensive states for car insurance in 2025 What is full coverage car insurance? How much does car insurance cost for seniors in 2025? A complete guide to adding a teenager to your car insurance policy in 2025 What to do after a car accident that’s not your fault Total warfare: What to do when your auto insurer totals your car Car insurance claims: Who gets the claims check? 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Part 1: How insurance companies spot bogus claims Insurance options for rideshare drivers 10 things that are illegal but shouldn’t be 1/1 On this page How does gap insurance work for a used car?When is gap insurance worth it for a used car?How to decide if gap insurance is right for your used car loanPros and cons of getting gap insurance on a used carHow much does gap insurance cost?Where to buy gap insuranceHow long should you keep gap insurance on a used car?What are the alternatives to gap insurance?Frequently asked questions ZIP Code Please enter valid ZIP See rates (844)-645-3330