Gap insurance coverage

Helps protect you from the unexpected for leased and/or loaned vehicles.

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What's gap insurance coverage?

Gap insurance helps pay the difference between what's owed on a vehicle loan and the actual value of it, if it's stolen or a total loss. This difference is what's referred to as the "gap".

In general, this "gap" occurs when you buy a new vehicle, the value (actual cash value) can start going down right away. This is what your car insurance covers, not what you owe on a loan. This is where gap insurance can help.

How does gap insurance work?

Let's say you buy a new vehicle with a $25,000 loan. You get into an accident and your vehicle is totaled. At the time of the accident, your vehicle is valued at $15,000 but you still owe $20,000 on your loan.

For a covered loss, you'd get paid for the value of your vehicle at the time of the incident ($15,000). This leaves $5,000 owed on your loan. With gap insurance, the difference would be covered, minus any deductible.

Please note, gap insurance coverage must be purchased at the same time as your car and you must be the car's first owner.

Couple shakes hand of car salesperson as they buy a new car.

How much does gap insurance cost?

The cost of gap insurance depends on many factors. In general, the cost of gap insurance coverage varies based on

  • Type of vehicle
  • Actual cash value of the vehicle
  • Where you buy the coverage (ex., insurance company, car dealer, or lender)
  • Claim history, etc.

In general, gap insurance may be cheaper if you buy it through your car insurance company vs a car dealer or lender.

Start your auto quote today, to see how much you could save on car insurance

Frequently asked questions about gap insurance

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