Gap Insurance: Protecting Your Florida Vehicle

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. While it is not required by Florida law, it may be required by your lender if you take out an auto loan. It is also a good idea to purchase gap insurance if you have a lease or car loan.

When is gap insurance necessary?

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. It is also a good idea to purchase gap insurance if you have a lease or car loan.

Gap insurance is designed to protect automobile owners if their car is totaled or stolen. It covers the difference between the amount you owe on a car loan and the car's actual cash value. This could be extremely valuable if you owe more on your car than it is worth.

• You put less than 20% down as a down payment.
• You have an auto loan that is longer than 60 months, such as a 72 or 84-month loan.
• You have accepted a high-interest rate.
• You have accepted a loan with front-loaded interest terms.
• You have rolled over a previous car loan balance into your current loan.
• You lease your vehicle (most lenders require gap coverage on leased vehicles).

Gap insurance is not necessary if you own your vehicle outright. You should also be able to drop the coverage once you have positive equity, i.e., when you owe less than what the car is worth.

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: 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.

In addition, although it does not offer traditional gap insurance, State Farm offers a similar program known as Payoff Protector for loans originated by State Farm Bank.

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 the 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 average gap insurance rate in Florida is $2,923 per year, according to a rate analysis by Insurance.com. This cost can also vary by insurance company.

Gap insurance from a car insurance company is usually cheaper than 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 is second on the list, followed by Travelers.

Gap insurance costs also vary by age. In Florida, a 20-year-old driver can expect to pay about $6,284 per year for gap insurance, while a 30-year-old driver would pay closer to $3,134 per year for the same coverage.

Gap insurance costs also differ from one city to another in Florida. For example, gap insurance costs are the cheapest in Avon Park, Florida, at $2,058 per year, or $172 per month. On the other hand, Miami has the most expensive gap insurance rates at $3,499 per year, or $292 per month.

What does gap insurance cover?

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 is particularly useful if your car is stolen or declared a total loss after an accident.

For example, if you buy a car for $20,000 and only make a small down payment, you could end up with negative equity on the vehicle. If you then get in an accident where your car is totalled, your standard insurance will only cover the depreciated value of the car. If you still owe $15,000 on the car loan, you would have to pay $2,000 in cash to clear your loan. With GAP insurance coverage, your insurer would help pay that $2,000.

GAP insurance is not required in Florida, but some leasing companies may require you to purchase it. Additionally, some dealerships may automatically add GAP insurance to your loan; however, you can decline this coverage.

It's important to note that GAP insurance does not cover costs related to vehicle repairs, personal injuries, or other accident-related expenses. It also doesn't cover your deductible in most situations.

Who should buy gap insurance in Florida?

Gap insurance is not required by law in Florida, but it is a good idea to buy it if you have a lease or car loan. Gap insurance is designed to protect automobile owners if their car is totaled or stolen. It covers the difference between the amount you owe on a car loan and the car's actual cash value. This could prove extremely valuable if you owe more on your car than it is worth.

• You have a lease agreement for your vehicle.
• You have an auto loan and make a down payment of less than 20%.
• Your auto loan term is five years or longer.
• You have rolled over a previous car loan balance into your current loan.
• You have accepted a high-interest rate.
• You decide to put less than 20% down as a down payment.
• Your car depreciates more quickly than other vehicles.

It is also worth noting that gap insurance is less common for used vehicles. Many insurance companies require that your car is less than two or three years old to purchase gap insurance.

Frequently asked questions