Gap Insurance In Florida: Everything You Need To Know In 2024
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New cars generally lose around 20% of their value within the first year of being owned. If your car is totaled and you owe more on your loan than the car’s current value, you could find yourself responsible for paying the difference.
This is where gap coverage becomes important for Florida drivers. Despite my many years in the insurance industry, I’ve found that not everyone fully comprehends how gap insurance functions. To get all the details on gap insurance, read on.
Key Takeaways
This insurance covers the financial shortfall if your vehicle’s worth is lower than what you owe on it.
You have the choice to get coverage independently or integrate it into your auto insurance.
It’s more affordable to purchase gap coverage from your auto insurer.
What Is Gap Insurance?
Guaranteed Asset Protection (GAP) insurance simplifies the difference between your vehicle’s market value and your lease or loan balance. After a total loss accident, insurers generally cover the car’s current value, not what you owe. Consequently, if your debt exceeds this value, you’re responsible for the balance.
CCC, an insurance software company, discovered that 20% of vehicles have been totaled rather than repaired. Considering the $48,759 average price of new vehicles, it’s plausible to owe more than your car is worth, especially with a modest down payment.
Note: A vehicle reaches total loss status when repairing it costs more than its market value. Auto insurance providers use resources like Kelley Blue Book or NADA to figure out the exact cash value of your car.
How Much Does Gap Insurance Cost?
Forbes Advisor states that gap insurance costs an average of $61 annually across the country. In Florida, the cost ranges from $24 to $360 per year, depending on whether it’s purchased from an insurance company or a dealership. Buying directly from your insurer is usually cheaper, despite state laws capping dealership prices at 5% of the loan or lease amount.
How Does Gap Insurance Work?
Let’s break down how gap insurance operates with a practical example: You buy a new car for $40,000, put down $5,000, and finance the rest. Years later, you’re in an accident. If your car is worth $20,000 and you owe $23,000, there’s a $3,000 difference. Without gap insurance, you’d foot this bill. But with gap insurance, your insurer covers the $3,000.
Caution: Gap insurance applies only when the amount you owe on your car exceeds its market value. Once your car loan is paid off, the insurance company won’t cover more than the car’s actual worth.
Where Can I Find Gap Insurance In Florida?
You can purchase gap insurance as a standalone policy or add it to your existing auto insurance. It’s usually more affordable to add it to your car insurance, which typically costs between $40 and $60 per year, compared to standalone policies that range from $500 to $700.
Note: Dealerships often bundle gap insurance costs into your loan, potentially increasing your expenses over time due to accruing interest. A more economical approach is to include it in your car insurance policy and cancel the coverage upon loan completion.
Gap Insurance VS Full Coverage
While both gap insurance and full coverage enhance the potential reimbursements from your insurance provider, they serve different functions. Gap insurance covers the difference between your car’s actual cash value and the remaining balance on your lease or loan.
In contrast, full coverage includes comprehensive and collision coverage, which pay for damages caused by incidents such as fire, theft, vandalism, and collisions with animals. Collision coverage specifically addresses repairs needed after your car collides with another vehicle or object.
| Gap Coverage | Full Coverage | |
| Applicable When the Car is Financed/Leased? | Yes | Yes |
| Required? | No | Yes, if the vehicle is financed/leased |
| Cost? | $61 per year | $2,542 per year |
| Deductible Apply? | Yes | Yes |
How To Buy Gap Insurance In Florida?
To obtain gap insurance in Florida, follow these instructions.
Determine if you want to buy gap insurance separately or bundle it with your car insurance, and then compare the pricing for both options.
Search for a respected company licensed to provide gap insurance in Florida. If you prefer, you can purchase this coverage separately when you finalize your lease or loan with the dealership.
Before purchasing gap insurance from your car insurer, ensure you contact them to confirm its availability.
Ensure your leased or financed car is covered by insurance.
Here’s a roster of companies permitted to provide gap insurance in Florida.
- Allstate
- USAA
- Progressive
- State Farm
- Travelers
- Infinity
- Farmers
Do I Need Gap Insurance In Florida?
Gap insurance isn’t compulsory in Florida. Florida law specifically prohibits making gap insurance mandatory for leases or loans. Nonetheless, experts advise purchasing this coverage if you’re leasing or financing a car, particularly in certain situations.
It’s a good idea to add gap insurance to your auto policy if you’re leasing or financing your car, given its affordability. However, if you’re trying to save money, you might choose to skip it unless you meet any of the following conditions:
- Your down payment is less than 20%.
- Your financing terms are 60 months or longer.
- Your vehicle depreciates faster than average.
- You rolled over a previous loan balance onto your new car loan.
FAQs
What does gap insurance cover in Florida?
Gap insurance is designed to cover the difference between your car’s value at the time of loss and the outstanding balance on your lease or loan. Without it, you would need to cover this cost on your own.
How much is Gap insurance in Florida?
In Florida, the price of gap insurance is determined by whether it is purchased independently or added to an existing auto insurance policy. Standalone policies typically range from $500 to $700 as a one-time payment, while insurance companies usually charge between $40 and $60 per year when added to an existing policy.
Do I need gap insurance if I have full coverage?
Most lenders will stipulate full coverage if you lease or finance your car. Although gap insurance isn’t necessary in these cases, it’s generally recommended.
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