Affiliate disclosure: Automoblog and its partners may be compensated when you purchase the products below.
Guaranteed asset protection, also known as gap insurance, covers the difference between your insurance payout after a total loss and the amount you still owe to your lender. Many drivers with a car loan pick up a version of Progressive gap insurance to cover their potential costs.
While there’s no such thing as Progressive gap insurance, policyholders have a similar option to protect their new or leased vehicles. That’s because Progressive offers loan/lease payoff coverage, which is similar but limits payouts to 25% of the vehicle’s value. Since there are other options on the market, we looked at the best car insurance providers to determine which one will provide the best gap coverage for your vehicle.
How Does Progressive Gap Insurance Work?
Those searching for Progressive gap insurance may notice that it goes by a different name: loan/lease payoff. That’s because the company has a slightly different policy in place than the typical gap insurance offered by other providers.
Gap Insurance vs. Loan/Lease Payoff Coverage
Loan/lease payoff coverage is pretty similar to gap insurance except that it limits the amount of money you’ll receive to 25% of the car’s value. In other words, you’ll receive a smaller percent of your vehicle’s original value with loan/lease payoff, though it’s still far greater than the car’s actual cash value (ACV) after an accident.
Gap insurance must usually be purchased near the beginning of your ownership period. On the other hand, loan/lease payoff can be purchased at most points in a car’s lifetime. Used cars also struggle to qualify for most companies’ gap coverage options, which is one reason that drivers may turn to Progressive gap insurance.
Do You Need Progressive Gap Insurance?
Whether or not you need Progressive gap insurance for your car depends on multiple factors. It’s usually a smart choice for new vehicles or leased cars, though, and policies are relatively inexpensive. Below, we’ll outline a few situations when gap insurance might be the right choice.
- You have a leased car: Most lenders require customers to get gap insurance for vehicles gotten via lease. Gap insurance is typically an add-on to your comprehensive coverage or collision coverage, though the policies aren’t always bundled.
- Your car has long-term financing: If you’ve taken out long-term financing on your car, you may need to buy gap insurance. A longer loan term means that you could eventually end up owing more to the financing company than the car’s ACV.
- Your car will quickly depreciate: Some car models depreciate quicker than other ones. Do your due diligence on the specific car model you own to make sure that you’re adequately protected against depreciation.
- You have a low down payment: For customers who buy their car with a down payment of under 20%, it makes sense to purchase gap insurance. Such low down payments will usually result in negative equity on the car as soon as it’s taken off the lot.
While Progressive gap insurance comes through the form of loan/lease payoff coverage, you’ll receive similar benefits. Those who need gap insurance will typically be able to pick up protection using Progressive’s option.
How Much Does Progressive Gap Insurance Cost?
Gap insurance is typically pretty affordable, though exact rates will be determined by factors such as your driving history, age and car model. Expect to spend an average of $20 per year to add a Progressive gap insurance policy to your existing coverage.
As with most plans, it’s helpful to bundle your Progressive gap insurance with homeowners insurance, renters coverage and life insurance. That way, you could get cheap auto insurance along with lower rates on your combined coverage types.
Is Gap Insurance Cheaper From an Insurer or a Dealership?
Motorists can also purchase gap insurance coverage from the dealership where they bought their car. It’s almost always cheaper to get gap insurance directly from a car insurance provider, however, even if the dealership bundles the policy with your car payment.
Buying gap insurance from a dealership may complicate matters if you plan to drop coverage at some point. Most major auto insurance providers are more flexible in letting you cancel your gap coverage. Keeping this in mind, we’d recommend picking Progressive gap insurance over a policy from a car dealership.
Our Recommendations for Auto Insurance
Progressive gap insurance could work well for some drivers, but others may prefer different options. Make sure to also consider State Farm’s auto insurance coverage as an alternative to Progressive gap insurance.
Whether you’re just looking at Progressive insurance for gap coverage or are considering a full coverage policy, it’s smart to compare multiple car insurance quotes. That way, you’ll be able to find cost-effective car insurance coverage that suits your needs.
State Farm: Best Overall
Those who receive an auto loan from State Farm itself gain access to the company’s free Payoff Protector? service. This program, which closely mirrors gap insurance, will cancel the difference between your vehicle’s ACV and the principal car loan balance. Note that your vehicle must be insured by State Farm and your loan must be from the company to qualify.
State Farm has a strong reputation across the industry for its wide range of local agents and competitive premiums. The company is especially compelling for young drivers due to its many discount opportunities for this high-risk group.
Progressive: Best for High-Risk Drivers
Progressive gap insurance, as mentioned above, is known as loan/lease payoff coverage and costs around $20 per year. Due to its excellent coverage, it’s a strong choice for those who want to protect their investment in a leased, used or new car.
Progressive is known to insure high-risk drivers who’d be rejected elsewhere for poor credit scores, bad driving records and speeding tickets. Note that loan/lease payoff coverage pays out 25% or less of your car’s original value, while gap insurance reimburses drivers far more.
Frequently Asked Questions (FAQs)
Does gap insurance cover a blown engine?
No, gap insurance coverage does not cover engine failure. It only pays for the difference that you owe on your vehicle after a car accident leads to a total loss. Gap insurance is an optional coverage plan, so it won’t be included by default with all auto insurance policies.
What is the maximum amount that gap insurance can pay?
In general, gap insurance covers the full difference between your car’s initial value and the car loan amount that’s left. You’ll likely have to pay a deductible before this aspect of your car insurance policy comes into play, however. Loan/lease payoff coverage, which is what you’ll get through Progressive gap insurance, has a payout limit of 25% of your car’s initial value.
Is gap insurance worth it after two years?
After two years, gap insurance makes sense if you’re underwater on your car loan. Those who have closed the gap between the value of their car and the amount owed likely won’t need gap insurance since they’ve made plenty of loan payments already.
Methodology
The Detroit Bureau collects data from every major car insurance provider to formulate rankings of the best insurers. Our in-depth rating system takes into account market share, coverage, auto insurance rate estimates generated by Quadrant Information Services, customer satisfaction and ratings from industry experts. Each insurer is given a weighted score in four categories, as well as an overall score out of 10.0.
We recommend auto insurance companies based on these rankings, but we also encourage you to perform your own research and compare quotes to find the best coverage.