AAA offers gap insurance in 23 states and D.C., costing a flat fee of $399 except in Colorado, and you must buy it when you take out your loan.
Here are the states where you can get AAA gap insurance:
AAA does not offer gap insurance in California, Texas or New York, but you can buy it from other insurers or dealerships.
How much is AAA gap insurance?
Gap insurance costs $399 except in Colorado where it’s $299.
You are only eligible to buy gap insurance at the time of origination for auto loans (e.g. when you take out the loan, but not at a later time), plus these conditions:
- Vehicle must be ten years old or newer.
- Vehicle cannot be reconditioned.
- Requested loan amount must be $5,000 or greater.
Gap insurance might be a contractual requirement for leased vehicles.
How does gap insurance work with AAA?
Gap insurance stands for Guaranteed Asset Protection, and is an optional, add-on policy that helps you avoid owing money in these situations:
- Your car gets totaled or stolen.
- You have a loan on the car.
When these incidents happen, your insurance payout might be less than how much you owe. Here’s a scenario
- You buy a new car and finance $25,000 in January.
- By August, your loan balance is $22,000 after making regular payments.
- Your car’s market value has depreciated to $18,000.
- In the same month, your car was totaled in an accident. Your auto insurance company determines the car’s actual cash value is $18,000 and offers this amount.
Without gap insurance, you still owe $4,000 on the loan ($22,000 loan balance – $18,000 insurance payout). With gap insurance, it covers the $4,000 gap, ensuring you don’t owe anything out of pocket.
This means that if the actual cash value (ACV) 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.
Does AAA offer vehicle loan/lease protection endorsement?
AAA does not offer loan/lease payoff coverage to assist with loan costs — only gap insurance will do that. Some insurers, like Progressive, offer an alternative add-on policy known as loan/lease payoff coverage which functions almost in the same way that gap insurance does.
How to find the best gap insurance
Not all major insurance companies offer gap insurance, Geico being a prime example. If you want to purchase gap insurance to keep your new car safe, AAA can offer you some competitive quotes — but consider comparing AAA’s rates to a few other providers before you make a final decision.
Xuyun Zeng is a writer and editor with a wide-ranging content background including tech, journalism, cars and health care. After graduating with highest honors in journalism, Xuyun led a newspaper to win eight awards, helped start an award-winning film industry podcast and has written over a hundred articles about cars repair, state laws and insurance. Prior to joining Jerry, Xuyun worked as a freelance SEO consultant with a mission to create the best content that will help readers and grow organic traffic.
Kevin Berry is the Senior Director of Content at Jerry and has been working in the digital content space since 2011 across the car insurance/repair, personal finance, travel and sports industries. Prior to Jerry, Kevin was a content team lead at NerdWallet overseeing the Multimedia Production and Travel Rewards teams. Previously, he worked for NBC Sports, Comcast Cable and Nike. He has a Master`s Degree from Arkansas State and a Bachelor`s from Oregon State University.
