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Gap insurance is financial protection you may want if you lease or finance a vehicle. If your car gets totaled or stolen, gap coverage pay the difference between the amount you owe on your auto loan and the vehicle’s actual cash value—but unfortunately, Farmers does not offer this coverage.

If you’re rolling through your daily commutes with a leased or financed vehicle, you may be interested in gap insurance. It’s an added layer of financial protection just in case something happens that turns your car into a total loss.

Several insurance companies offer this type of coverage, but Farmers doesn’t have gap insurance as an option for its policyholders. So if you think you’d want this type of coverage, you’ll have to look elsewhere for it, but we’ll cover that and other need-to-knows of gap insurance here.

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Does Farmers offer gap insurance?

No, Farmers does not offer gap insurance.

Gap insurance

, or Guaranteed Asset Protection insurance, is a type of auto coverage popular for drivers with a leased or financed vehicle. In the wholly unfortunate event that your vehicle gets totaled or stolen without recovery while you’re still paying on its loan, gap insurance covers the difference between the car’s

actual cash value

(ACV)

and the amount you still owe on the loan.

Let’s break that down. Suppose you have $15,000 left to pay on your auto loan and your vehicle gets wrecked beyond repair or stolen. In that case, your insurance company will

calculate the value of your totaled car

including your car’s natural depreciation. If the insurance company deems your car to currently be worth only $10,000 and you don’t have gap insurance, a total loss on your vehicle would leave you to cover the remaining $5,000.

How does gap insurance work with Farmers?

Farmers does not offer gap insurance to its policyholders, but it has something relatively similar. Folks with new cars can opt into Farmers’ new car replacement coverage that, in the event of a total loss, will cover the replacement costs of a new car of the same make and model as the previous. But keep in mind you’re only eligible for Farmers’ new car replacement coverage for the first two model years and 24,000 miles on your vehicle.

Without gap insurance or new car replacement coverage, your best option for recovery after a total loss vehicle is a full coverage insurance policy. Typically, full coverage includes your basic liability insurance,

collision coverage

, and

comprehensive coverage

While none of these coverage options do anything to mitigate any financial loss of what you still owe on your auto loan after a total loss, collision and comprehensive insurance will help cover the cost of the actual cash value of your vehicle. And unfortunately, most drivers with car loans are paying more toward the interest of the loan than their vehicle’s actual worth in the first few years of having it.

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What to do if you have Farmers and need gap insurance

If, as a Farmers insurance subscriber, the thought of not having access to gap insurance is stressing you and your freshly financed vehicle out, don’t worry—insurance companies are not the only ones able to dole out gap insurance!

Banks, credit unions, and even your car dealership can provide you with gap insurance when you sign onto an auto loan through them. This option does tend to be pricier in the long run because your insurance will roll into your loan balance and you’ll have to pay interest on it, but it can be a good way to get coverage in a pinch. It may even be a requirement from some lenders.

And of course, you can always get gap insurance through a different car insurance company by switching your car insurance provider altogether. Major insurers like

Progressive

Nationwide

, and

Allstate

offer gap insurance, so take some time to gather three to five policy quotes based on your driver profile, coverage needs, and budget and see if any other insurer stands out.

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Is gap insurance worth it?

Generally, gap insurance is a worthy investment. When added onto an existing auto insurance policy, it usually only costs an additional $20 to $40 per year but could wind up saving you thousands or even tens of thousands of dollars if your vehicle is totaled or stolen.

Even in the first year or two of having your new car, it can significantly depreciate in value. Other types of insurance, like collision and comprehensive coverages, will only cover losses up to the car’s actual cash value, not what you bought it for.

Having the extra financial protection of gap insurance can offer you more profound security than other types of coverage—and once your auto loan is lower than your car’s value, you can cancel it!

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What is the most gap insurance will pay?

There isn’t a definitive pay cap for gap insurance. Instead, the max amount of payout will depend on factors like the details of your current insurance policy, the size of the down payment you made on your car, and more.

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