Leif Olson, Car Insurance Writer
@leif_olson_1
The difference between gap insurance and full coverage is that gap insurance helps pay off your car loan or lease if your car is totaled, while full coverage is a collection of insurance types covering collision damage, non-collision damage and liability claims. Full coverage does not always include gap insurance.
Gap Insurance
Guaranteed asset protection, or gap insurance, kicks in when you are financing a car and it is totaled or stolen. Gap insurance helps cover the difference between what you still owe on your loan or lease and the actual cash value (ACV) of your car before it was totaled.
Full Coverage
Full coverage is shorthand for a collection of coverages—typically comprehensive, collision and liability insurance. Thus, “full coverage” includes coverage for collisions regardless of fault, coverage for non-collision damage from things like severe weather, and at least the minimum level of liability protection required in your state.
Full Coverage vs. Gap Insurance
| Type of Coverage | Full | Gap Insurance |
| What is it? | A combination of coverages that includes liability, comprehensive and collision insurance (can include gap coverage too) | Coverage that pays the difference between your auto loan or lease balance and the car's actual cash value |
| What’s covered? | Other people’s injuries and property damage that you cause and damage to your vehicle | The remaining balance on your loan or lease after insurance |
| What’s not covered? | Your medical expenses | Anything beyond the difference between your loan/lease and ACV |
| Is it required? | Liability insurance – required by most states Comprehensive and collision insurance – may only be required by lenders and lessors | Not by state law, but lenders or lessors may require it |
Generally, you can only add gap insurance to a car that already has comprehensive and collision coverage. If there is a gap between your car’s ACV and your car’s loan or lease balance, adding gap insurance will give you the most complete coverage. Otherwise, your car is considered fully covered without it.
To learn more about full coverage, gap insurance, and other types of car insurance coverage, check out WalletHub’s guide to the types of car insurance.
People also ask
Do I need gap insurance if I have full coverage?
Gap insurance is needed even if you have full coverage because full coverage will not reimburse you for the difference between what you owe on your car loan or lease and the vehicle’s actual cash value if the car is totaled or stolen. Gap insurance fills in that gap.
When You Need Gap Insurance If You Have Full Coverage
- You’re financing/leasing a new vehicle for a long term (60+months).
- You made...
Is gap insurance a waste of money?
Gap insurance is a waste of money if you are not financing your vehicle or if you could pay the difference between your loan or lease balance and the actual cash value of your car out of pocket. Gap insurance is never mandated by state law, and it is only sometimes required by lenders or lessors. Thus, it is up to you to decide whether gap insurance is worth the cost in your situation.
Gap Insurance...
read full answer by John S Kiernan, Managing EditorIs gap insurance worth it?
Gap insurance is worth the money whenever you owe more on your car loan or lease than the car is worth. For example, if you paid a small down payment on your car, your loan term is 4-5 years or your car will depreciate quickly, you should consider getting gap insurance.
Gap insurance is never mandated by state law, and few lenders or lessors require it, so the decision to buy it depends on...
read full answer by WalletHub, Financial CompanyDid we answer your question?
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