Gap Insurance in Florida
Florida doesn’t require gap insurance, but it could make the difference between an insufficient insurance payout and a paid-off auto loan.
Written by R.E. Fulton
Edited by Kathleen Flear
Also known as guaranteed asset protection insurance,
gap insurance
steps in after a total loss accident to cover the difference between the actual cash value of your vehicle and your car loan balance.- Purchasing gap insurance in Florida ensures your auto loan or lease will be paid in full following a total loss car accident, even if the payout from your car insurance is insufficient.
- Gap insurance is an optional type of coverage and doesn’t replace liability insurance. It will not cover repairs to your car or bodily injuries to you or your passengers.
- Under Florida law, gap insurance policies cannot be one of the conditions of a vehicle loan, lease, or sale.
- Many auto insurance companies offer gap insurance coverage in Florida, often as an add-on to your full-coverage policy.
- Purchasing gap insurance in Florida ensures your auto loan or lease will be paid in full following a total loss car accident, even if the payout from yourcar insuranceis insufficient.
- Gap insurance is an optionaltype of coverageand doesn’t replaceliability insurance. It will not cover repairs to your car or bodily injuries to you or your passengers.
- Under Florida law, gap insurance policies cannot be one of the conditions of a vehicle loan, lease, or sale.
- Many auto insurance companies offer gap insurance coverage in Florida, often as an add-on to your full-coverage policy.
How gap insurance works in Florida
Florida gap insurance offers financial protection by covering the difference between the
actual cash value (ACV)
of your vehicle and the amount remaining on your car loan.Here are three reasons adding gap coverage to your auto insurance policy could save you hundreds or thousands of dollars:
- New cars depreciate rapidly. Most models lose 20% of the value of their purchase price within their first year of ownership.
- You’re probably going to have an upside-down car loan. It’s not uncommon for your loan balance to exceed your car’s actual cash value during the first few years of ownership. This is called “negative equity,” and most car owners will spend some time in this situation early on in the life of their auto loan.
- Insurance payouts only cover the ACV of your vehicle at the time of loss. If your check doesn’t cover your car loan completely, you’ll have to pay the difference out of pocket.
In summary, gap insurance can offer vital financial protection for some Florida drivers—or anyone who doesn’t want to get stuck making loan payments on a wreck.
Keep in mind: You’ll need a
full coverage auto insurance policy
with comprehensive and collision coverage in order to purchase gap insurance. 
Florida gap insurance: Numbers you should know
- Average cost of a new car as of March 2023: $47,713*
- % of new cars sold for under $30,000: 17%
- % of full-size pickup trucks sold for under $60,000: 50%
- Average value lost in the first year of car ownership: $9,542
- Average cost of gap insurance: $20 to $40 per year
*Source: Edmunds.com, https://www.edmunds.com/car-news/where-did-all-the-cheap-cars-go.html
Average 5-year depreciation rates for Florida's most popular cars
- Toyota Corolla: 21%
- Toyota RAV4: 21%
- Toyota Camry: 24%
- Ford F-150: 24%
- Chevy Silverado: 22%
Source: Edmunds.com, https://www.edmunds.com/most-popular-cars/. Average depreciation rates from CarEdge.com.
The best gap insurance companies in Florida
There are three places where you can buy gap insurance in Florida: dealerships, car insurance companies, or auto loan lenders, such as credit unions.
Because you’re more likely to find savings with a regular insurance provider, let’s cover the biggest companies that offer gap insurance to Florida policyholders:
- Allstaterecommends gap insurance to anyone who opted for a lease, a long-term loan, or a small down payment.
- Nationwidemakes it cheaper to add gap insurance coverage to your existing insurance policy than to buy it at a car dealership.
- Progressivelimits any gap insurance payouts to 25% of the insured vehicle’s value—and they call it “loan/lease payoff coverage.”
- State Farmdoesn’t offer a gap insurance product, but they do offer a financing product called “Payoff Protector.” It’s reserved for customers who finance their auto loan through State Farm.
- USAAoffers some of the lowest rates for military members and their families, so if you’ve already got a policy, call an insurance agent to ask about adding gap coverage.
These are just a few of the most popular insurance companies in Florida—we haven’t even covered
Liberty Mutual
or Travelers
! As time-consuming as the search may be, shoppers who compare car insurance quotes
usually find the lowest insurance rates.Buying gap insurance in Florida
Here’s what you need to take into account when purchasing coverage in Florida:
- Don’t let a dealer trap you into it:Florida lawprohibits listing the purchase of gap insurance as a precondition of a vehicle loan or sale.
- You can cancel it when you don’t need it: You’re allowed to cancel gap insurance at any time and receive a pro-rated refund of any unused premiums.
- You’ll still have to pay a deductible: Gap insurance generally doesn’t cover any deductibles.
- You still need to file a claim: Gap insurance won’t provide your vehicle’s ACV after theft or weather damages—that’scomprehensive coverage!
Never buy gap insurance from a dealership: Your lender might offer you gap insurance when you take out a car loan, or the dealership might offer it when you purchase your car. But insurance providers usually offer the cheapest gap coverage—as much as 90% cheaper than the cost of gap insurance from a dealership!
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What’s the difference between gap insurance and new car replacement coverage?
Gap insurance covers your car loan, while
new car replacement coverage
covers your next new vehicle purchase.Let’s say you purchase a new car, gap insurance, and new car replacement coverage. Your new car gets totaled. If there’s any difference between the actual cash value of your car and your remaining loan balance, gap insurance will cover it. But if there’s any difference between the value of your original car and the purchase price of the latest model year, new car replacement coverage will cover it.
Do you need gap insurance in Florida?
Florida law prohibits lenders and dealerships from requiring gap insurance for a car loan, lease, or purchase. But Florida drivers who enter a long-term car loan, make a small down payment, or choose a rapidly depreciating car model should consider purchasing gap insurance.
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