, to cover the gap between your car insurance settlement and the balance of your loan or lease—but it's actually more cost-effective to get gap insurance from your

car insurance

company.

If you want to buy an Audi, your dealer will most likely offer you GAP. Here's everything you should know about this policy, who it's ideal for, and how to get it from your auto insurance company.

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How to lower your Audi insurance costs

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How does Audi GAP work?

Audi GAP is a coverage that Audi dealerships provide with all new car sales. If your Audi is declared a total loss as a result of an accident,

theft

, or natural disaster, your gap and primary insurance deductible can potentially amount to thousands of dollars.

If you opt for Audi GAP, Audi may help you by eliminating some or all of the difference between your primary insurance payout and the outstanding balance on your vehicle's financing. Subject to the program's restrictions and circumstances, GAP coverage may also assist in covering your insurance deductible.

There is no maximum dollar limit on eligible losses waived, and Audi GAP includes a $1,000 deductible waiver for your primary insurance. If another private party has to assume your finance agreement, you can transfer your GAP for a fee.

While your Audi GAP is only purchasable when financing, it is cancelable at any time—but you’ll be subject to a fee if it’s canceled after 30 days.

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When your car is totaled and you don’t have gap insurance

How much does Audi GAP cost?

Adding GAP to a loan or lease agreement with Audi, on average, costs between $750 and $1,000.

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How much does gap insurance cost per month?

Audi GAP vs. alternative gap insurance

Your insurance company may also sell you a form of gap insurance (guaranteed asset protection). Gap insurance is available from the majority of major insurance companies, including

GEICO

Progressive

, and

State Farm

Which is best, then? Audi makes it easy to add GAP to your financing deal, but it might not be the most cost-effective choice. Compare the pros and cons of buying Audi's GAP versus adding it to your standard car insurance coverage in the table below.

Audi Guaranteed Auto Protection	Gap coverage from your auto insurance company
Only available during financing	Available while your loan balance exceeds the actual cash value of your vehicle (ACV) You are either the first or second person to own the car (prior ownership guidelines differ by provider) The car meets the age and mileage requirements of your insurance company, which usually means it is under three years old with low mileage
$750 to $1,000	$20 to $40 per year
Cancel at any time; fee after 30 days	Cancel at any time
Limited refunds	Standard refunds

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Should I get gap insurance from a dealer or an insurance company?

Do you need gap insurance?

Gap insurance can be a lifesaver if you find yourself in a situation where the value of your new car is less than what you owe on it, but it's not mandatory—and not always worthwhile.

People who lease vehicles are often required by their lease agreements to obtain gap insurance, either from the dealership or their own insurance provider. You should review the lease agreement to determine if gap insurance is required.

Don't forget that the moment you hit the road with your new car, depreciation starts. If you buy a

2022 Audi Q3 Premium

for $27,595, the car's value will drop by about 15% within the first two years, putting you in negative equity. Having gap insurance gives you the security of not having to worry about a deficiency balance in the case of a total loss.

But, you may not want to pay for gap insurance if your loan term is less than five years or if you put down over 20% of the car's value. In most cases, it is also unnecessary when purchasing a used vehicle—unless you are investing in a rare model.

How to cancel Audi gap insurance

Audi GAP can be canceled at any time after purchase. After the initial 30 days, however, there will be fees for canceling your policy.

If you think you may have missed the grace period for paying off your loan, you should review the details of your loan agreement or contact your dealer.

Getting a quote for your new Audi and your insurance carrier's GAP insurance ahead of time can save you time and money. So, when you go to the dealership, you can show them the

proof of insurance on your phone

and be ready to accept or decline the Audi gap insurance.

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How to cancel gap insurance and get a refund

What is the Audi gap insurance refund process?

Within the first 30 days after purchase, you are entitled to a full refund if you cancel your Audi GAP coverage. However, if you return your lease or sell the car, you can get a refund on a portion of the gap coverage you purchased from Audi. If this is the case, you will be eligible for a prorated refund on your unused GAP.