What is gap insurance and do I need it?

Gap insurance pays the difference between your vehicle’s actual cash value and what you still owe on your loan or lease if the vehicle is totaled or stolen.

You should consider gap insurance if:

• You bought a new vehicle with less than 20% down
• Your loan term is 60+ months
• You leased the vehicle (most leases require gap)
• You bought a depreciation-heavy vehicle (luxury, electric, some trucks)
• You rolled negative equity from a previous vehicle into the current loan

You probably don’t need it if:

• You put 20%+ down and have a short loan (≤48 months)
• Your loan balance is already below the vehicle’s ACV
• You paid cash

Where to get gap:

• Your insurer (typically cheapest: $20-40/year)
• Lender (usually overpriced, sometimes hidden in the loan)
• Dealer (most expensive, often a one-time $500-700 fee)

Always price gap from your own insurer first.