Is gap insurance the same as full coverage? This question is about Gap Insurance Guide

No, gap insurance is not the same as full coverage, but it can be part of full coverage. Full coverage is commonly defined as the combination of a state’s minimum required insurance, comprehensive insurance, and collision insurance, though gap coverage is included if required by a lender or lessor. Gap Insurance vs. Full Coverage Category Gap Insurance Full Coverage What It Covers The gap between a car’s actual cash value and the balance left on a loan/lease Damage and injuries caused to others, theft, and damage from collisions, natural disasters, and more When It Applies When vehicles are totaled or stolen When vehicles are damaged, totaled, or stolen Covered Vehicles Financed vehicles Any vehicle Average Cost Costs $400 to $700 total from a dealership Costs $20 to $40 per year from a car insurance company Costs about $1,997 per year on average To learn more, check out WalletHub’s guides on gap insurance and full coverage.

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Is gap insurance the same as full coverage?

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This question is about Gap Insurance Guide

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Catherine C Ford, Writer

@catherine_ford_1 • 09/07/22 This answer was first published on 09/07/22. For the most current information about a financial product, you should always check and confirm accuracy with the offering financial institution. Editorial and user-generated content is not provided, reviewed or endorsed by any company.

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No, gap insurance is not the same as full coverage, but it can be part of full coverage. Full coverage is commonly defined as the combination of a state’s minimum required insurance, comprehensive insurance, and collision insurance, though gap coverage is included if required by a lender or lessor.

Gap Insurance vs. Full Coverage

Category	Gap Insurance	Full Coverage
What It Covers	The gap between a car’s actual cash value and the balance left on a loan/lease	Damage and injuries caused to others, theft, and damage from collisions, natural disasters, and more
When It Applies	When vehicles are totaled or stolen	When vehicles are damaged, totaled, or stolen
Covered Vehicles	Financed vehicles	Any vehicle
Average Cost	Costs $400 to $700 total from a dealership Costs $20 to $40 per year from a car insurance company	Costs about $1,997 per year on average

To learn more, check out WalletHub’s guides on gap insurance and full coverage.

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What does gap insurance cover?

Gap insurance covers the difference between your auto loan and the car's depreciated value. In other words, gap insurance helps you pay off your auto loan or lease if you're no longer able to drive your car due to it being totaled or stolen.

It’s important to note that gap insurance only pays when your car is totaled or stolen, so you cannot file a gap claim if you simply can’t make your loan or lease payments. Additionally, most gap insurance policies will not pay your ... read full answer collision or comprehensive deductible, if applicable.

Loan/Lease Payoff Insurance: Gap Insurance Alternative

Not all insurance companies offer gap insurance, but some offer loan/lease payoff insurance as an alternative. Loan/lease coverage is similar to gap insurance, except that it usually only pays up to 25% of the vehicle’s actual cash value toward the policyholder’s loan or lease balance, which might not be enough to cover the full amount owed.

If you’re curious about gap insurance or loan/lease coverage, you should check with your insurance company to see if they offer either.

To learn more, check out WalletHub’s guide to gap insurance.

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Is it good to have gap insurance?

Yes, it is good to have gap insurance if you owe more on your car loan or lease than your car is worth. Gap insurance is especially useful if you’ve made a small down payment on your vehicle, you have a long-term loan (more than 4 years), or you have a car that depreciates in value quickly.... read full answer

Gap insurance is never required by state law, though some lenders or lessors may require it as part of your contract. Having gap insurance can prevent you from owing money on an unusable vehicle if it is totaled or stolen.

When It Is Good to Have Gap Insurance

You cannot afford to pay off your loan or lease if your car is stolen or totaled.

You made a small down payment.

You have a loan lasting more than 4 years.

Your car is the main source of transportation for your household.

Your driving habits are causing the car’s value to depreciate faster than usual (for example: driving more miles than the average person).

Your car is a make or model that depreciates in value quickly, like electric vehicles or sports cars.

Your loan includes negative equity from a previous vehicle you financed, meaning your loan amount is higher than it would otherwise be.

Gap insurance costs an average of $20 to $40 per year when added to an existing insurance policy, so it is a relatively inexpensive way to protect your finances.

To learn more, check out WalletHub’s guide to gap insurance.

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What happens if you have gap insurance but not car insurance?

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