Gap Insurance Explained

Q: What is gap insurance?

A: Gap insurance protects you if your car is totaled and you owe more than it’s worth.

Q: How much do dealers typically charge for gap insurance compared to insurance companies?

A: Dealers often sell it for $500–$700 as a one-time flat fee (sometimes up to $1,000+ if rolled into financing), but most insurance companies add it to your policy for $20–$60 per year (totaling $100–$300 over a 3–5 year term).

Q: What are some notes or nuances about gap insurance?

A: Dealer versions can be 2–5x more expensive due to markups, but they may offer perks like covering up to 150% of the vehicle's value (vs. 120–125% from insurers) or easier claims without raising your insurance premiums. Costs vary by vehicle value, loan terms, and provider—e.g., major insurers like State Farm or Progressive average around $90/year. It's most valuable for new or financed cars with high depreciation; if your down payment is 20%+ or the loan is short, it might not be needed. Always compare quotes from your auto insurer first, as dealership gap is often bundled and accrues interest if financed.

Q: How does VINdicated help with gap insurance?

A: VINdicated calls out overpriced gap coverage — so you don’t get stuck paying 2–5× the real cost.