How much does gap insurance cost?

Added to an existing auto policy, gap insurance usually costs about $20–$60 per year. Bought from a dealer and rolled into your loan, the same coverage typically runs $400–$700 as a one-time charge — and you pay interest on it. Buying gap from your own insurer is almost always the cheaper route.

Gap insurance — formally Guaranteed Asset Protection — pays the difference between what you still owe on your auto loan or lease and the car's actual cash value if it's totaled or stolen. Because a new car can lose 20% or more of its value in the first year, that gap can run into the thousands. The coverage is inexpensive; what varies enormously is *where* you buy it.

Two ways to buy it, two very different prices

• From your auto insurer (cheapest): Added as an endorsement to an existing policy, gap typically costs about $20–$60 per year, often quoted as roughly 5–6% of your combined comprehensive-and-collision premium, per the Insurance Information Institute. You pay it as part of your normal premium and can drop it once your loan balance falls below the car's value.
• From the dealer (most expensive): Sold in the finance office as a one-time product, dealer gap typically runs $400–$700 — and because it's usually rolled into the loan, you also pay interest on it over the loan term. The dealer's price often includes a markup the Consumer Financial Protection Bureau has flagged in auto-finance add-on reviews.

When gap coverage is worth the cost

Gap makes the most sense when you made a small down payment, financed for 60 months or longer, rolled negative equity from a previous loan into the new one, or leased. In each case you're more likely to owe more than the car is worth for a stretch of the loan. Once your loan balance drops below the car's value, the coverage no longer has anything to pay out — and that's the moment to drop it.

If you already bought dealer gap, you may be owed a refund

Dealer gap is priced for the full original loan term. If you pay the loan off early, refinance, or sell the car, you're usually owed a prorated refund of the unused premium — but it's rarely automatic. ClearValue Lending is not a licensed insurance broker or agent; confirm pricing and coverage with your insurer or a licensed agent.

Sources

• Gap insurance bought through an auto insurer typically costs about 5–6% of the combined comprehensive and collision premium — often $20–$60 per year. — Insurance Information Institute — What is gap insurance? (iii.org)
• Auto-loan add-on products such as gap are commonly sold and financed at the dealership, where the cost is included in the amount financed and accrues interest. — Consumer Financial Protection Bureau (consumerfinance.gov)

Related

• Is gap insurance worth it?
• What is GAP insurance for a car, and what is a simple interest auto loan?
• How do you get a gap insurance refund?

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