• Jarod Evans

How gap insurance works

Gap insurance protects you from depreciation. After you buy your car, its value starts to decrease—sometimes significantly. If you financed or leased the car, this depreciation ends up leaving a gap between what you owe on your car and its value. With Progressive's loan/lease payoff coverage, we'll pay off the difference between your loan amount and what your car is worth (minus your deductible)—up to 25% over your car's value.

Example: You finance $30,000 for a new car. You've had it for a few years and have been making all of your payments. It's now worth $20,000 and you owe $25,000 on your loan. That's a $5,000 gap. If you total it, we'll pay you $25,000 (minus your deductible). Without gap insurance, you'd only get $20,000 (minus your deductible).

Keep in mind, you must have comprehensive and collision coverage on your policy to qualify for gap insurance — what some refer to as full coverage. See more on comprehensive or collision.

What does gap insurance cover?

Gap insurance applies any time your vehicle is totalled from physical damage and your insurance pays out. At Progressive, there are no situations in which we’ll tell you that your car insurance covers your damages but your gap insurance doesn’t apply.

Is gap insurance required?

Gap insurance isn’t required by any insurer or state, but some leasing companies may require you to purchase it.

How much is gap insurance?

At Progressive, gap insurance only costs about $5 a month on average. It’s inexpensive coverage that can offer more value for the money, especially if there’s a big gap between your car’s actual cash value and the balance left on your loan.

Looking for an exact price for gap insurance? Get a car insurance quote online and we’ll show you in just a few minutes.

Is gap insurance worth it?

Gap insurance is worth the money if there’s a sizeable difference between your car’s value and what you owe on it. Here are a few situations where the gap is wide enough to seriously consider purchasing gap insurance:

  • You financed the purchase of a car with a high rate of depreciation

  • You’ve just leased or purchased a new car with a small down payment

  • You’re financing your vehicle for more than 48 months

Gap insurance may also be worth it if your family only has one car and can’t afford to go without one for an extended period of time.

How long does gap insurance last?

Once you add gap insurance, it applies for the duration of your policy.

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