How Much Does GAP Insurance Cost

GAP insurance averages $7/month through your insurer. Dealer-financed GAP runs $400–$700 and costs 3 to 4x more over a 60-month loan. Compare costs and find the cheapest option

Written by Mark Fitzpatrick

Updated: June 8, 2026

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Key Takeaways

GAP insurance averages $7/month ($84/year) when added through your auto insurer. Through a dealership, the same coverage runs $400 to $700 financed, approximately 3 to 4x more over a 60-month loan once interest is factored in.

The cheapest way to buy GAP is through your auto insurer: add it to your existing policy, cancel it when your loan balance falls below your car's value, and pay no interest on the premium.

GAP is most cost-effective in the first 18 to 24 months of a loan when depreciation runs fastest. Cancel when your annual KBB or Edmunds estimate exceeds your loan payoff balance.

GAP insurance costs an average of $7 per month ($84/year) when purchased as an add-on through your auto insurer. The same coverage through a dealership runs $400 to $700 financed into your loan, which grows to $580 to $800 once interest is applied over a 60-month term. That spread can exceed $460 for identical protection. Learn more in our GAP insurance definition hub.

Your vehicle's value and outstanding loan balance are the two variables that shape your premium, but the insurer route remains the lower-cost option across virtually every scenario. Whether you're financing a new sedan or a used SUV, the math consistently favors adding GAP to your existing policy. Read our full analysis of is GAP insurance worth it to decide if you need it at all.

GAP Insurance Cost: Insurer vs. Dealership

Running the full numbers makes the difference clear. A dealer-financed GAP policy priced at $600 and rolled into a loan at 7% APR over 60 months totals approximately $712 to $715 in actual payments. The insurer route, at the industry average of $84 per year, costs approximately $420 over the same five years — a difference of roughly $290 to $295 compared with the dealer route. Drivers who find a flat-fee insurer charging as little as $40 per year would pay approximately $200 over five years, widening the gap to $510 or more. The National Consumer Law Center has documented dealer GAP markups of up to 300%, which is why shopping through your insurer first is the financially sound default.

Purchase Source	Upfront Cost	Annual Cost	5-Year Total (with interest at 7% APR)
Auto insurer add-on	$0 upfront	~$84/year	~$200–$420 over 5 years
Dealer financed (7% APR/60 months)	~$500–$700	Equivalent annual included in loan	~$580–$800 total with interest
Credit union	~$200–$400 flat	$0 annual	~$200–$400 total

Cost ranges from Insure.com (insurer), NCLC report (dealer), and industry sources. Actual costs vary by vehicle, loan amount, and provider. The insurer 5-year range reflects the spread between low flat-fee providers (~~$40/year) and the industry average (~~$84/year).

GAP Insurance Cost by Insurance Company

GAP insurance pricing varies meaningfully across carriers. Progressive is consistently among the lowest-cost providers, averaging approximately $4/month, roughly half the industry average. Some insurers price GAP as a flat annual fee regardless of vehicle value; others calculate it as a percentage, typically 5% to 6%, of your comprehensive and collision premium. If you carry higher full-coverage limits, your GAP add-on will cost slightly more under the percentage-based model.

Insurance Company	Average Monthly Cost	Source
Progressive	~$4/month	Insure.com / Quadrant Information Services
Allstate	~$6–$8/month	Insure.com / Quadrant Information Services
Nationwide	~$5–$7/month	Insure.com / Quadrant Information Services
GEICO	~$6–$8/month (where available; state availability varies)	Insure.com / Quadrant Information Services

Monthly cost data from Insure.com analysis based on Quadrant Information Services. Rates vary by state, vehicle, and individual driver profile. GEICO GAP insurance availability varies by state; confirm availability with your local GEICO agent before purchasing.

What Determines Your GAP Insurance Premium

Your vehicle's value and loan-to-value (LTV) ratio are the main drivers of GAP exposure and, for some insurers, your premium. A $45,000 truck financed at 100% LTV creates a larger potential gap between the loan balance and the car's actual cash value than a $22,000 sedan with a $5,000 down payment. Longer loan terms compound this: a 72-month loan keeps you underwater, owing more than the car is worth, for much longer than a 36-month term, increasing the window of time you genuinely need GAP coverage.

Insurers use two main pricing methods. Many charge a flat annual fee, commonly $20 to $40, regardless of your vehicle's value or loan size. Others price GAP as a percentage of your comprehensive and collision premium, typically 5% to 6%. Under the percentage model, drivers who carry higher liability limits or insure more expensive vehicles will pay slightly more for GAP. Progressive, which uses a flat-fee structure, tends to be the most affordable option for drivers with higher-value vehicles.

When to Stop Paying for GAP Insurance

Cancel GAP insurance when your loan payoff balance drops below your vehicle's actual cash value (ACV). At that point, you are no longer upside down on the loan, meaning a total-loss payout from your insurer would fully cover what you owe. Check your position annually: pull an ACV estimate from Kelley Blue Book or Edmunds, then request a loan payoff statement from your lender. If ACV exceeds the payoff balance, cancel GAP immediately.

The cancellation process differs by purchase source. For insurer-purchased GAP, call your insurer or cancel through the mobile app. Most carriers will prorate a refund for the unused portion of your premium. For dealer-financed GAP, contact the dealership's finance and insurance (F&I) department or your lender directly to start a cancellation and request a partial refund. Confirm refund eligibility with your specific provider before canceling, as terms vary.

Frequently Asked Questions About GAP Insurance Cost

How much does GAP insurance add to my monthly car payment?

Through your auto insurer, GAP insurance typically adds $4 to $7 per month to your policy premium. Carriers like Progressive average around $4 per month, making insurer-purchased GAP the most affordable option. If you purchase GAP through the dealership and roll it into your loan, the equivalent monthly cost typically rises to $8 to $12, because that figure includes interest charges accumulated over the life of the loan.

Is GAP insurance included in my car payment?

GAP insurance is included in your car payment only if you purchased it through the dealer and rolled the cost into your auto loan. In that case, the GAP premium plus interest is spread across your monthly loan payments. If you purchased GAP through your auto insurer, it appears as a separate line item on your insurance bill, not your car payment.

How long do I need GAP insurance?

You typically need GAP insurance until your loan balance drops below your vehicle's actual cash value (ACV), which typically takes 18 to 36 months for standard loan terms. Drivers with longer loan terms of 60 to 72 months, or those who made little or no down payment, may typically need GAP coverage for up to three years. Check annually by comparing your Kelley Blue Book or Edmunds ACV estimate against your current loan payoff balance.

Does GAP insurance cost more for a new car vs. a used car?

GAP insurance generally costs more for a new car, though the difference is modest when purchased through an insurer. New cars depreciate faster in the first year, often 15% to 25%, which creates a larger gap between the loan balance and ACV. Some insurers factor vehicle value into their GAP pricing, but many carriers charge a flat fee regardless of vehicle age or value, so the cost difference may be minimal. Dealer-sold GAP on a new car is often priced higher because dealers base the premium on the vehicle's MSRP.

Which insurer has the cheapest GAP insurance?

Progressive offers the cheapest GAP insurance among major carriers, averaging approximately $4 per month according to Insure.com data from Quadrant Information Services. Nationwide typically ranges from $5 to $7 per month. Allstate is generally in the $6 to $8 per month range. GEICO typically ranges from $6 to $8 per month where GAP coverage is available, though availability varies by state — confirm with your local GEICO agent. Rates vary by state, vehicle and driver profile, so get a quote directly from your current insurer before shopping elsewhere.

Can I get a refund if I cancel GAP insurance early?

Yes, you can typically get a refund if you cancel GAP insurance early, but the process depends on where you purchased it. If you bought GAP through your auto insurer, you're generally entitled to a prorated refund for the unused portion of your premium. If you financed GAP through a dealership, you may be eligible for a partial refund based on the remaining loan term, but you must contact the finance and insurance department or lender to start the process. Some dealer contracts include a cancellation fee, so confirm refund terms with your provider before canceling.

Cost data from Insure.com (Quadrant Information Services) and NAIC. Dealer cost ranges from National Consumer Law Center report on add-on products and dealer markup practices. Five-year cost calculations use 7% APR over 60 months as an illustrative example — a $600 dealer GAP policy at 7% APR over 60 months yields approximately $712 to $715 in total payments. Insurer 5-year totals reflect the range between low flat-fee providers (~$40/year, ~~$200 total) and the industry average (~~$84/year, ~$420 total). Actual costs depend on individual loan terms, vehicle value, and state of residence.

About Mark Fitzpatrick

Mark Fitzpatrick, a Licensed Property and Casualty (P&C) Insurance Producer in Connecticut, is MoneyGeek's resident insurance expert. He has spent nearly a decade analyzing the market, first at LendingTree and now at MoneyGeek, where he has produced original research on hundreds of carriers and millions of rates across auto, home, renters, health and life insurance.

He covers economics and insurance at MoneyGeek, and his work has been featured in The Washington Post, The New York Times and NPR, among other outlets.

Like all MoneyGeek analysts, he draws on independent cost and consumer experience data. No insurance company partnership influences his recommendations.

Fitzpatrick earned his degrees from Johns Hopkins University (M.A. Economics and International Relations) and Boston College (B.A.). He began his career in financial risk management at State Street. He's also a five-time “Jeopardy!” champion.

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