What This Coverage Includes
- Difference between loan balance and ACV in total loss
- Coverage for lease payoff amounts
What This Coverage Does NOT Include
- Any coverage for non-total-loss damage
- Payments toward your regular loan (just the gap)
When This Coverage Makes Sense
- Financed vehicle with less than 20% equity
- Leased vehicles (often required)
- Long-term loans (60+ months) on depreciating vehicles
- Small or no down payment on purchase
When You Might Skip This Coverage
- Substantial down payment (20%+)
- Short loan terms where depreciation is slower
- Used vehicle purchased with cash/small loan
Cost Considerations
Typical Additional Cost: $20-60 per year (often bundled into loan/lease payment)
Premium costs vary significantly by location, vehicle, driver profile, and chosen limits. The figures above are national averages and should be used only as rough guidance. Get actual quotes for accurate pricing.
Frequently Asked Questions
This depends on both the specific coverage type and your state. Some coverages (like liability) are required in nearly all states. Others (like collision, comprehensive, or gap insurance) are optional but may be required by your lender/lessor if you finance or lease your vehicle. Check our state-by-state minimum requirements guide for specifics.
In most cases, yes. You can add, remove, or adjust optional coverages (collision, comprehensive, roadside assistance, etc.) at any time by contacting your insurer. Changes typically take effect at your next renewal, though some adjustments can be made mid-term with possible prorated refunds or additional charges. Required coverages (like state minimum liability) cannot be dropped below legal minimums.
This information is educational only. Coverage details, availability, and costs vary by insurer and state. Always review actual policy documents before purchasing. Consult licensed professionals for advice specific to your situation.