Chelsey Tucker graduated with a Bachelor of History degree from Metropolitan State University in 2019. She now writes about insurance with her specialty being life insurance and has been quoted on Help Smart Phone and MEL Magazine.

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Dan Walker graduated with a BS in Administrative Management in 2005 and has been working in his family’s insurance agency, FCI Agency, for 15 years. He is licensed as an agent to write property and casualty insurance, including home, auto, umbrella, and dwelling fire insurance. He’s also been featured on sites like

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Reviewed by Daniel Walker
Licensed Auto Insurance Agent

UPDATED: Mar 19, 2020

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The lowdown...

  • GAP insurance is a supplemental form of insurance coverage that stands for Guaranteed Auto Protection
  • The purpose of GAP is to help borrowers pay off their loans and lease agreements if their car is totaled
  • If you put a small amount down on your car or you have a high-interest loan, you should consider buying GAP
  • When your car is stolen and you file a comprehensive claim, you’ll only receive the fair market value of the car
  • Once the theft claim is paid, you can file a claim against your GAP coverage to pay off the balance of your loan

Many people aren’t aware of the limitations that are present in the standard auto insurance policy. Just because you have a full coverage policy doesn’t mean your policy covers it all.

It’s possible that you could go years paying premiums on your car for full coverage just to be stuck paying off the balance of your loan without much help from your carrier.

When your car is stolen, it creates a unique challenge for your carrier to value your car. If you owe more on your loan than the car is worth, like most borrowers, you’ll be held responsible for the remainder of your loan balance.

One solution is to buy GAP coverage. If you want to know how GAP works when you file a theft claim.

Enter your zip code into our free car insurance comparison tool to find the coverage that’s right for you.

What is GAP and when is it available to you?


GAP insurance stands for Guaranteed Auto Protection. It’s not part of a standard auto policy but will provide you with supplemental physical damage coverage on your financed or leased car.

The purpose of GAP is to help borrowers pay off their loans when their car’s value is estimated to be lower than the balance of the loan after it’s totaled.

Since GAP protection pays the difference between what the insurer pays and what’s due on your loan, you must be a borrower and you must carry full coverage insurance for your GAP coverage to take effect.

If you’re leasing, having GAP may actually be a contract requirement and not just an option for extra protection.

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Do you have to buy your GAP coverage through your lender?

You have to learn a lot about the car-buying process to truly get the better end of the deal as a buyer.

As you evolve as a borrower, you’ll learn that it’s better to walk into the dealership with a pre-approval to get better rates and even a better sales price. Unfortunately, a lot of ill-informed borrowers pay too much for warranties and GAP.

You’ll be offered the option to add alarm systems, rims, and GAP to your financing while you’re sitting with a finance manager.

It might feel like the best option to take the $600 to $1200 GAP plan you’re being offered, but you have other options.

You can either try to negotiate to pay a lower cost in the finance office, or you can buy coverage through a third party and wind up paying less.

It’s also better to choose alternative options because you don’t have to finance the insurance coverage in your auto loan contract and pay interest on it.

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How much will your auto insurance pay when your car is stolen?

If your car is stolen, you can file a claim against your comprehensive coverage. Comprehensive does help you pay to repair or replace a stolen or vandalized car, but it has its limitations.

  • First off, the deductible that you hold will be deducted from your total loss claim total. If you have a higher deductible, this could really affect you.
  • Secondly, your comprehensive physical damage coverage will only pay up to the actual cash value of your vehicle. That’s defined as the fair market value plus estimated sales tax and titling fees for the replacement vehicle. Since many people owe more than their car is worth, that leaves you stuck paying for a car you don’t have access to.

When should you carry GAP insurance?


It doesn’t always make sense to pay a monthly premium or interest payment just to have GAP. It’s only in your best interest if there’s a strong chance you’ll need to use it if your car is ever totaled or stolen.

Here are a few scenarios where it’s best to carry GAP:

  • You put little to no money down when you buy your vehicle
  • You buy a vehicle brand new and it depreciates dramatically right when you purchase it
  • You have bad credit and have to secure a high-interest loan
  • The interest on your loan is front-loaded so you’re paying more of your interest than your principal
  • You trade a vehicle with negative equity in so your down payment doesn’t go towards the purchase price of the car

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Can you buy GAP through your insurer?

Not all car insurance companies offer GAP. Those that do will offer GAP in limited situations if the vehicle qualifies. Most of the time, the car can’t be over a certain age.

The premium will be dependent on the car’s age and the model. Typically, you won’t pay more than $10 per month for the coverage if your car qualifies.

How do you file a GAP claim if your car is stolen?


Before you can file a claim against your GAP coverage, you have to start the process by filing a claim against your auto policy.

Your insurer will investigate the loss, value your vehicle, and then send you a settlement offer if the car isn’t recovered in a reasonable amount of time.

After that, you can decide to haggle or accept the offer.

When you receive your final claims payment, you can then advise your GAP provider that your car has been stolen. The GAP insurer will need to get the 15-day auto loan payoff and may ask for a detailed statement of what’s financed.

It’s possible that negative equity, warranty costs, and other loan costs won’t be covered. A check will be cut for the balance the GAP provider is required to pay off.

If you’re going to be stuck paying on a loan for a car that was stolen, it’s best that you look for protection. GAP is a good way to safeguard yourself, but it too has some limitations.

Get online quotes for coverage under an auto policy and compare the costs of third-party options to decide what’s best. Enter your zip code below to begin.