If you’re financing or leasing a vehicle, GAP insurance can be one of the most important protections you buy—but many drivers aren’t sure who actually offers GAP insurance or where to get the best deal.
In this guide, we’ll break down who offers GAP insurance, how each provider compares, and how to choose the best option for your situation.
What Is GAP Insurance?
GAP insurance (Guaranteed Asset Protection) covers the difference between what your car is worth (actual cash value) and what you still owe on your auto loan or lease if the vehicle is totaled or stolen.
For example:
- You owe: $28,000
- Your car’s value after depreciation: $22,000
- GAP insurance covers the $6,000 gap
Without GAP insurance, you would have to pay that amount out of pocket.
Who Offers GAP Insurance?
GAP insurance is offered by four main types of providers:
- Auto dealerships
- Auto insurance companies
- Banks, credit unions, and lenders
- Third-party insurance providers
Let’s examine each option in detail.
1. Auto Dealerships
Dealership GAP Insurance
Most car dealerships offer GAP insurance at the time of purchase or lease. This is one of the most common ways people buy it.
Pros
- Convenient (added directly to your loan)
- No separate billing
- Available for both new and used cars
Cons
- Often the most expensive option
- Interest is charged if financed
- Coverage terms vary widely
Dealership GAP insurance can cost $500–$1,200 or more when rolled into your loan.
👉 Learn more about dealer-provided GAP insurance from the FTC:
https://consumer.ftc.gov/articles/buying-used-car
2. Auto Insurance Companies
GAP Insurance From Insurance Providers
Many major auto insurance companies offer GAP insurance (sometimes called loan/lease payoff coverage) as an add-on to your existing policy.
Popular insurance companies that offer GAP insurance include:
- Progressive
- GEICO
- Allstate
- Nationwide
- State Farm (varies by state)
Pros
- Much cheaper than dealership GAP
- Easy to manage with your auto policy
- Cancel anytime if loan balance drops
Cons
- Usually requires full coverage
- Coverage limits may apply
- Not available for older vehicles
Average cost: $5–$20 per month
👉 Example: Progressive GAP coverage
https://www.progressive.com/answers/gap-insurance/
3. Banks and Credit Unions
GAP Insurance Through Lenders
Many banks, credit unions, and auto lenders offer GAP insurance when you take out a car loan.
Pros
- Often cheaper than dealership options
- Can be financed or paid upfront
- Reputable financial institutions
Cons
- Must be purchased at loan origination
- Limited customization
- Not always refundable
Credit unions, in particular, often offer very competitive GAP insurance pricing.
👉 Learn more about auto loan protections:
https://www.consumerfinance.gov/consumer-tools/auto-loans/
4. Third-Party GAP Insurance Providers
Standalone GAP Insurance Companies
Some independent companies sell GAP insurance directly to consumers.
Pros
- Often the cheapest option
- Flexible cancellation and refunds
- Can switch providers without refinancing
Cons
- Requires separate payment
- Must ensure provider is reputable
- Claims process may be separate from insurer
Examples include specialty insurance providers and online insurance marketplaces.
Which GAP Insurance Provider Is Best?
| Provider Type | Cost | Convenience | Flexibility |
|---|---|---|---|
| Dealership | High | Very High | Low |
| Auto Insurer | Low | High | Medium |
| Bank/Credit Union | Medium | Medium | Low |
| Third-Party | Low | Medium | High |
Best overall for most drivers:
👉 Auto insurance companies or credit unions
When Do You Need GAP Insurance?
You should strongly consider GAP insurance if:
- You made a low or zero down payment
- You financed for 60–84 months
- Your car depreciates quickly
- You leased your vehicle
- You rolled negative equity into a new loan
If you owe more than your car is worth, GAP insurance is a smart move.
When GAP Insurance Is NOT Necessary
You may not need GAP insurance if:
- You made a large down payment (20%+)
- Your loan balance is lower than market value
- Your car is older and paid off quickly
- You have significant savings to cover a loss
How to Choose the Right GAP Insurance
Before buying, ask these questions:
- What is the maximum payout limit?
- Does it cover deductibles?
- Is it cancelable and refundable?
- Is it tied to my loan or insurance policy?
- Are there vehicle age or mileage limits?
Always compare at least two providers before purchasing.
Final Thoughts
So, who offers GAP insurance?
The answer is: dealerships, insurance companies, lenders, and third-party providers—but not all options are created equal.
For most drivers, GAP insurance through an auto insurer or credit union offers the best balance of affordability and coverage. While dealership GAP may be convenient, it’s usually the most expensive.
Protect yourself from unexpected financial loss—especially if your vehicle is financed or leased.