The best gap insurance comes from Travelers, The Hartford, and Liberty Mutual, based on factors like cost and maximum payout amount. Drivers can usually get the best gap insurance by purchasing coverage directly from their auto insurer rather than from a dealership or bank, since it’s cheaper and allows policyholders to avoid paying interest on their premium.
Best Gap Insurance Companies
Gap insurance is a type of car insurance that covers the difference between a totaled car’s value and the balance on a loan or lease. When purchased from a standard insurer, gap insurance generally costs about $20-$40 annually.
Some insurance companies offer alternatives to gap insurance, such as loan/lease coverage. Details vary by company and policy, but loan/lease coverage generally pays up to 25% of the car’s actual cash value toward the remaining balance.
Best Gap Insurance Companies
The best gap insurance company is Travelers because the company’s premiums are generally affordable and it has fewer customer complaints than average. For the price of approximately 5% of the car’s comprehensive and collision premium, Travelers customers can add loan/lease gap coverage to their policy. Only vehicles purchased directly from a new car dealer are eligible.
The Hartford sells gap insurance that must be added to your policy within the first 30 days after purchasing or leasing the vehicle. Gap insurance from The Hartford is an especially good option for AARP members, since the company is known for its discounted AARP rates and coverage tailored to senior citizens. The Hartford does not disclose the average cost of its gap insurance.
Liberty Mutual offers gap insurance that costs an average of $5-$15 per month, which can be more expensive than coverage from some competitors. However, Liberty Mutual gap insurance is still a good choice for drivers who already have their auto policy with the company. Since gap insurance is usually only a minor portion of your premium, it’s more cost-effective to focus on the price of your entire policy.
Gap coverage from Nationwide is available for cars that are 6 years old or newer, and the company does not disclose average prices. Instead, cost varies depending on the car’s value. Besides gap insurance, Nationwide offers a variety of policy and discount choices for drivers, including usage-based and pay-per-mile options.
Gap insurance from Kemper typically costs about 5% of the car’s comprehensive and collision premium. Kemper gap insurance is a good choice for high-risk drivers who might struggle to find car insurance coverage elsewhere. On the other hand, Kemper has an unusually high number of customer complaints, so it’s probably not the best gap insurance for consumers with a clean driving record.
Progressive is one of the most affordable car insurance companies overall, and its “loan/lease payoff” coverage costs about $5 per month. However, it’s important to note that Progressive loan/lease payoff coverage pays a maximum of 25% of the car’s actual cash value (ACV). As a result, it’s only a good option if the difference between your loan or lease balance and your totaled car insurance payout is less than 25% of the car’s ACV.
Loan/lease gap coverage from Esurance pays up to 25% of the car’s actual cash value. As a result, Esurance might not be the best choice if you anticipate a gap of more than 25% at any point during the life of your lease or loan. However, the company’s premiums are consistently affordable. It’s also worth noting that Esurance only sells auto policies online or over the phone.
Tips for Getting the Best Gap Insurance
1. Get a gap insurance quote from your current insurer.
As a general rule, insurers only sell gap coverage to customers who also have their standard car insurance policy with the company. Consequently, your first step for getting the best gap insurance should be asking your current insurer if they sell gap coverage. If they offer gap insurance or a similar type of coverage, ask about the maximum payout amount and how much it would cost to add to your policy.
2. Consider alternatives, but take coverage limits into account.
Not every insurance company offers gap coverage, but some provide similar types of coverage. Loan/lease coverage works the same way as gap insurance, but it usually pays up to a maximum of 25% of the vehicle’s actual cash value. Additionally, many companies offer new car replacement, which pays for the difference between a totaled vehicle’s value and the cost of purchasing a brand-new car of the same make and model. However, it’s important to note that new car replacement will not pay off your loan or lease balance.
3. Consider your current & future needs.
To prevent future inconvenience, you should check your policy details and read customer reviews before purchasing gap insurance to determine if a company allows customers to easily cancel their gap coverage. Gap insurance is useless once your lease or loan balance is less than the car’s value, so many drivers cancel their gap coverage after a few years.
4. Avoid gap insurance from your dealership or bank.
Dealerships and banks usually include the cost of gap insurance in your total loan or lease amount, meaning that you’ll pay interest on your gap premium. However, some banks or dealerships include free gap insurance automatically. For instance, car loans made with State Farm Bank include a free “Payoff Protector” rider, which functions the same way as gap insurance.
5. Make sure you have your deductible amount saved.
Most gap insurance policies will not pick up the tab for your collision or comprehensive deductible if your car is stolen or destroyed in an accident. So even if you have gap insurance, you should still be prepared to pay your deductible if your vehicle is totaled.
Video: Best Gap Insurance Companies
WalletHub editors determined the best gap insurance by evaluating the coverage offered by more than 17 car insurance companies. We considered each company’s average premium, WalletHub editor rating, user rating on WalletHub, the number of states where the company sells coverage, and the company’s gap insurance payout limit (double weighted). Price was used as a tiebreaker when necessary.
Premiums used to evaluate each company represent an average of quotes for 30 California ZIP codes. The quotes reflect coverage for a 45-year-old single man who drives 15,000 miles annually and has a clean driving record plus good credit. Premiums are for the following coverage limits:
- $15,000 in bodily injury liability coverage per person
- $30,000 in bodily injury liability coverage per accident
- $5,000 in property damage liability coverage