Does AAA Have Gap Insurance?

You can purchase gap insurance through AAA, as long as you have liability and comprehensive coverage as well. Gap insurance can help protect newer vehicles.
Written by Mary Cahill
Reviewed by Christelle Agustin
AAA gap insurance is an optional, add-on policy that could benefit drivers who are financing or leasing a newer vehicle. If your vehicle is stolen or totaled and the amount you owe on your loan is greater than the car’s value at the time of the incident, gap coverage pays for the difference—which can save you thousands.
Understanding this unique
car insurance
policy's ins and outs can be tricky, so we’re here to help you decide if gap insurance is a good financial decision for you. We’ll explore how gap insurance works, who you should purchase it from, and how it affects the total cost of your premium. Read on to get all the info.

Does AAA offer gap insurance?

Yes, they do.
Gap insurance
stands for Guaranteed Asset Protection. This means that if the actual cash value (
) of your vehicle at the time it’s declared
a total loss
by the insurance company is less than what you still owe on the financing or leasing agreement, gap insurance will cover the difference.
Few assets lose their value quicker than a brand-new vehicle does. In fact, it’s widely reported that the ACV of your new car begins depreciating the moment you drive it off the dealership lot. For this reason, if you total your car or it gets stolen shortly after you’ve agreed to finance or lease it, there’s a big chance that your loan balance is higher than what the car is actually worth.
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How does gap insurance work with AAA?

The optional gap coverage AAA offers will literally—fill the gap—between what you still owe on your now totaled new car and the ACV of that car right before the incident. Without gap insurance, you will be held financially responsible to pay the difference between the loan balance and the insurance payout.
Keep in mind that in order to reap the benefits of AAA gap insurance, you must already have
liability insurance
comprehensive insurance
. AAA gap insurance typically makes up for 5% of your total premium, so it is affordable—but unless you also have liability and comprehensive policies, gap insurance can’t do what it’s meant to.
Let’s look at a scenario where AAA gap insurance can come to the rescue:
  • You just agreed to finance a new car that costs $32,000 and put a 10% downpayment on it. Your total car loan is $28,800. You’re offered gap insurance and agree to purchase it since you already have comprehensive coverage. 
  • Just months later, a hurricane hits your hometown and you watch helplessly as your shiny new sedan floats down the block. Since cars depreciate almost instantly, your car is worth 15% less than it was when you bought it, bringing its ACV to $27,200—minus your $1,000 deductible. 
  • That means the amount you receive after filing a claim is $26,200. Since you’ve only paid $1,000 in car payments so far, there’s a gap of $1,600 between your current loan balance and the insurance money you received for the total loss car. 
  • If you have gap insurance, you can submit a copy of your loan agreement with a copy of the insurance settlement, and AAA will pay the $1,600 gap on your behalf—saving you from writing a hefty check.
If you’re interested in adding gap insurance to your existing AAA policy, you can contact an agent at 833-443-0023 or check out
car insurance quotes online
to get an idea of how much it costs.

Gap insurance vs. loan/lease payoff coverage

Some insurers, like
, offer an alternative add-on policy known as loan/lease payoff coverage which functions almost in the same way that gap insurance does. AAA does not offer loan/lease payoff coverage to assist with loan costs—only gap insurance will do that.
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Is it better to buy gap insurance from the dealership or your insurance company?

It’s common for gap insurance to be offered to you at the dealership at the time of signing your loan agreement. If you finance your vehicle through the dealership, gap insurance, or what’s called a gap waiver is in the fine print of your contract. That means if you don’t want gap insurance as part of your coverage plan you’ll need to opt out of it before you sign.
The biggest downside to buying gap insurance
through a dealership or auto lender instead of from your insurance company
is that you’ll pay interest on it. Since the coverage cost is rolled in with your loan, it comes with an interest rate—just like your car payment does.
You may notice that there’s a small monthly fee—usually a few dollars per month—added to your premium from the gap insurance, but it’s a much cheaper charge than monthly interest would be.

Is gap insurance worth it?

When you have a new car, investing in gap insurance is a good precaution. Catastrophic damage or theft happens unexpectedly—and if your new vehicle is affected, you’ll be thankful for gap insurance’s protection.
Interest rates have reached record highs in recent years and a typical
loan term is six years long
. As a result, more and more drivers are in a financial position in which they owe more on their vehicles than what they’re worth—for a longer period of time.
You may also notice that if you lease your vehicle, gap insurance is a contractual requirement. That’s why it’s so crucial to thoroughly read through your contract, so you know exactly what you’re signing up for.

How to find the best gap insurance

Believe it or not, insurance industry heavyweights
State Farm
do not offer gap insurance. If you want to purchase gap insurance to keep your new car safe, AAA can offer you some competitive quotes—but we recommend comparing AAA’s rates to a few other providers before you make a final decision.
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