Gap Insurance: Florida's Ultimate Car Protection

Guaranteed Asset Protection (GAP) insurance is an optional form of auto insurance in Florida. It covers the difference between the value of your car and the amount you still owe on your loan. This type of insurance is particularly useful if you have a new car, as it can help protect you from financial loss if your car is stolen or declared a total loss. GAP insurance is not required by Florida law, but it may be required by your lender or leasing company if you take out an auto loan. It typically ranges from $5 per month to a few hundred dollars and can be purchased from your auto insurance provider, car dealership, or lender.

When is gap insurance required in Florida?

Gap insurance is not required by law in Florida. However, it may be required by your lender or lessor if you are financing or leasing your vehicle. Gap insurance is also a good idea if you have a lease or car loan, as it can provide financial protection and peace of mind.

Gap insurance is most useful when you have a new car, as it can depreciate rapidly and be worth less than what you owe on your auto loan. It can also be beneficial if you have an auto loan and have made a down payment of less than 20%, if your auto loan term is five years or longer, or if your car depreciates more quickly than other vehicles.

If you decide to purchase gap insurance, you can typically buy it from your lender or insurance company. It will generally cost you around $20 per year to add to your car insurance policy, although prices can vary depending on the financial institution.

How does gap insurance work?

Guaranteed Asset Protection (GAP) insurance is an optional form of auto insurance in Florida. However, it may be required by your lender if you take out an auto loan or lease a vehicle. GAP insurance covers the difference between the value of your car and the amount you still owe on your loan. This type of insurance is particularly relevant if you have a new vehicle, as it can be used if your car is stolen or damaged beyond repair.

For example, if you buy a car for $30,000 and it is written off in an accident, your insurance company will pay out the depreciated value of the car. If the car's value at the time of the crash is $24,000, you will be left with a $6,000 gap to cover the remaining loan. With GAP insurance, your insurer would pay this $6,000.

GAP insurance can be purchased from your auto insurance provider, car dealership, or auto loan provider. It is recommended that you first ask your current insurer about adding GAP insurance to your policy, as this is typically the cheapest way to purchase coverage. The cost of GAP insurance from your insurer may be as low as $5 per month, whereas a gap waiver from a dealership will often be a few hundred dollars.

When purchasing GAP insurance, it is important to understand the details of the policy. Some insurers may impose certain limitations, such as restricting the amount of coverage based on the value of the car or requiring you to purchase other forms of insurance. Additionally, not all insurers will pay your deductible as part of the "gap".

GAP insurance is valuable protection when there is a substantial difference between your car's actual cash value and what you owe on it. It is worth considering if you made a lower down payment on a new car, have a longer finance term, are leasing your car, or have a loan rollover.

Where can you buy gap insurance in Florida?

In Florida, you can purchase gap insurance from your auto insurance provider, or you can purchase a stand-alone gap insurance policy from your car dealer or lender.

When purchasing a new car, you will likely be offered gap insurance by your lender or dealership. However, it is recommended that you first ask your current insurer about adding gap insurance to your policy, as this is typically the cheapest way to purchase coverage. The cost of gap insurance from your insurer may be as low as $5 per month, whereas a gap waiver from a dealership will often be at least a few hundred dollars.

Some of the best car insurance companies offering gap coverage in Florida include:

• Allstate: Allstate offers gap insurance to policyholders who are the original owners or leaseholders of a new vehicle.
• Liberty Mutual: To get gap coverage from Liberty Mutual, you must be the vehicle’s first owner and purchase the coverage at the same time as your vehicle.
• Progressive: Once added to your policy, Progressive’s Gap insurance does not expire as long as your vehicle is insured with Progressive.
• Travelers: You must be the original owner and purchase your vehicle from a dealership to be eligible for gap coverage from Travelers.

How much does gap insurance cost?

The cost of gap insurance in Florida depends on various factors, including the value of your car, the length of your loan, and whether you get it through a dealership or an auto insurance provider. The Insurance Information Institute estimates that adding gap insurance to a policy costs around $20 per year. However, the cost can vary by insurance company. For example, the average gap insurance rate in Florida is $2,923 per year, according to a rate analysis by Insurance.com.

When purchased through an insurance company, gap insurance is usually cheaper than when bought from a dealership or lender. The cost of your Florida car insurance may only increase by about $60 per year if you buy it as an endorsement to your auto insurance policy. In contrast, a gap waiver from a dealership will often be at least a few hundred dollars.

Geico offers the cheapest gap insurance in Florida, at about $1,684 per year on average. State Farm and Travelers are also among the cheapest providers.

Gap insurance is not required by Florida law, but it may be required by your lender if you take out an auto loan. It's a good idea to buy it if you have a lease or car loan.

What happens if you don't have gap insurance?

Gap insurance is an optional form of auto insurance in Florida, although it may be required by your lender if you take out an auto loan. It covers the difference between the value of your car and the amount you still owe on your loan. If your vehicle is totaled in an accident, gap insurance will pay the difference between what your insurance company pays and what you still owe on your loan.

If you don't have gap insurance and your car is totaled in an accident, you will be responsible for paying the remaining balance of the totalled car's loan or lease. Even if you are not at fault for the accident, the at-fault driver's liability insurance will only cover your vehicle's actual cash value, not the remainder of any loan or lease. This could leave you thousands of dollars in debt and without a car.

For example, let's say you still owe $30,000 on your auto loan for your vehicle, but it has depreciated since you purchased it last year. If your vehicle is totaled and the current market value for your vehicle is $26,000, this is the amount you'll receive from your insurance company (minus your deductible). Without gap insurance, you would be left owing $4,000 to your lender at a time when you'll also need to replace your vehicle.

In some cases, you may be able to negotiate with your insurance company about the worth of your totalled car. While this isn't a guarantee, if you can prove your car was worth more than they estimated, you may be able to get a higher payout.

When purchasing a new car, you will likely be offered gap insurance by your lender or dealership. However, you can also purchase gap insurance from your auto insurance provider, or you can purchase a stand-alone gap insurance policy from your car dealer or lender.

Frequently asked questions