Search Site
FREE Case Evaluation 877-884-8579
Gap Insurance

What is gap insurance?

Gap insurance is an optional insurance coverage for newer cars.  It is normally added on to your existing collision insurance policy. Gap insurance covers the difference between what you still owe on your car and how much the car is actually worth if you are involved in an accident and your car is considered a total loss.

For many drivers, a standard insurance policy provides enough protection to cover the cost of repairs or replacement if their car is damaged, totaled or stolen.

However, if you own a new vehicle, you should consider that if your car is totaled, or declared a total loss, after an accident, your car and the car’s actual cash value is lower than the amount you owe on your loan, that difference, or “gap,” will not be covered by insurance.  The insurance company is only required to pay the fair market value or actual cash value of your vehicle; not the balance of your loan.

Your car loses value the moment you drive it off of the lot. Some vehicles are known to lose as much as 30% within the first few months of purchase.  By the second year, the value of most cars depreciate by 20%.

Do I need gap insurance? 

Say that you finance a vehicle with a total loan amount of $40,000.  Once you drive it off of the lot, the value of your vehicle immediately decreases.  Your car may now only be worth $32,000, but your loan will still be $40,000.

If you are involved in a car wreck and your car is declared a total loss, your insurance will only pay the $32,000 that the car is actually worth.  Without gap insurance, you will be responsible for paying back the $8,000 balance on your loan.

Your insurance company doesn’t care how much you owe on your auto loan – they will never pay out more than the car is actually worth. You will be left to foot the difference if you do not have Gap insurance.

Should I buy gap insurance?

You may want to consider purchasing gap insurance if:

  • You are buying or leasing a new or slightly used vehicle of significant value.
  • If you plan on taking out a long-term auto loan. Chances are you’ll end up “upside down” on the value of your car.
  • You are financing a new or used vehicle without a large down payment, creating a “gap” between your vehicle’s actual value and your loan amount.
  • You think you would have trouble coming up with the funds to cover the “gap” in case of an accident.

Keep in mind that gap insurance policies are typically only needed for the first few years of your auto loan. Eventually, your car will match the market rate and you’ll earn some equity on your vehicle.

So here’s a tip if you’re considering purchasing Gap insurance for your new vehicle:

Look outside of the car dealer! Most people think that the car dealer is the only source, but you may actually be able to find better rates by shopping around.  Credit unions, banks and your own insurance company may also offer this service at a lower price.

Contact an experienced Atlanta-area auto insurance attorney today

Kaine Law advises Georgia clients on issues relating to gap auto insurance and related concerns. To schedule an appointment with a knowledgeable attorney, call us at 877-884-8579 or contact us online. Our offices are located in Atlanta, Conyers, Lawrenceville, and Stockbridge.  Hablamos Español.

Our Attorneys
Videos & Media

  • Meet Kaine Law

    Experienced Atlanta auto accident lawyer Evan Kaine understands the physical, financial and emotional impact an injury can have on you and the people you love. That is why at Kaine Law, LLC, we have dedicated our legal practice to assisting victims of injuries caused by the negligence of others

  • Top 5 Reasons Why
    Kaine Law is Right for You

  • Atlanta Car Accident Lawyer - Kaine Law, LLC

  • June is National Safety Month

    Personal Injury Attorney Talks Staying Safe

  • Georgia Motorcycle Laws

    New Rider's Guide

Awards & Affiliations
  • Best Places To WOrk
Reviews & Ratings
  • yelp

    They stayed in contact with me for 2yrs. If I called and left a message they always returned the call within a week. They kept me updated on my case. They let me know how long things would take and what they were actually waiting for. No one was ever...

    Read more

    Amanda T.

  • yelp

    I have been a client at Kaine Law for a few years now and I would never go anywhere else. They are truly amazing! I highly recommend

    Read more

    Liz M.

  • facebook

    I hired Kaine law last year and was not disappointed. Very dedicated and informative. They always answer when you call and answered every question I had. Settled my case quickly. Than you Kaine law!!!!

    Read more

    Jamie Hudson

  • google

    It should be noted that the 3 negative reviews below (two from Hazledean and one from McCabe) are Husband, Wife and Daughter and should be read as one review not three separate incidents.

    Read more

    David J

  • facebook

    The best in GA. Easy to work with and always answer the phone and every question you have. They took care of my case and mad me extremely grateful I chose them by far better than any other firm I've worked with.

    Read more

    Bryan Harrelson

See all reviews
Contact us

Quick Contact Form