or leases. Guaranteed asset protection, or GAP insurance, covers the difference between what you owe on your loan or lease and what your car is worth if it’s stolen or totaled.

Dozens of insurance providers, banks, and car dealerships sell gap insurance in Tennessee, so you have lots of options to choose from. This high level of competition helps make gap coverage affordable no matter where you get it. However, buying gap insurance from your

car insurance

company is often the cheapest route.

Not all insurance providers offer gap coverage, though. That’s why we’ve created this guide to help you decide between the ones that do. Read on to learn the best Tennessee gap insurance providers, plus how gap coverage works, what it covers, how much it costs, and whether it’s right for you.

MORE:

How to lower your Tennessee car insurance costs

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The best gap insurance companies in Tennessee

Although dozens of providers do offer gap insurance in the Volunteer State, you might be surprised by some of the major providers that don’t. That’s why getting gap coverage on your new vehicle may require you to

switch insurance companies

With so many great providers offering gap coverage, it’s a good idea to do yourself a favor and check out

car insurance quotes

from at least three to five companies to make sure you’ve got the best deals in Tennessee.

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Is the Jerry app legit?

How does gap insurance work in Tennessee?

Gap insurance works the same no matter where you live. As the name suggests, it fills the “gap” between what you owe on a new car and its

actual cash value

Gap coverage isn’t available on all insurance policies though. To add it to yours, you’ll first need to ensure you’ve got

full coverage car insurance

that includes both

collision coverage

and

comprehensive coverage

. It should go without saying, but you also need to have a loan or lease on your vehicle since there’s no “gap” to fill if your vehicle is paid off.

Shopping for gap coverage is kind of a two-way street. While you’re looking for the best options for a provider, your provider is also going to be looking at you and your vehicle to ensure you’re a good fit. Each insurer will have its own criteria for qualification, but here are the most common requirements:

The vehicle must be less than three years old

The vehicle must have no prior damage

You must be the vehicle’s first owner (some companies allow you to be the second owner)

The vehicle is within mileage restrictions set by the provider

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New car insurance: What coverage do you need when buying a new car?

What does gap insurance cover?

Put simply, gap insurance protects you (and your lender) against depreciation.

The moment you leave the dealer lot in your new car, it loses up to 5% of its value. Depreciation continues at high rates for the first year of ownership. In fact, a study by the

Insurance Information Institute (III)

reveals that most new vehicles depreciate by about 20% within the first twelve months of ownership.

You don’t have to be a mathematician to know that most borrowers aren’t going to pay off 20% of a new car loan in the first year, which is where gap insurance comes in. If your car is totaled while you still owe more than it’s worth, gap insurance will pay the difference. In fact, some gap policies even pay your

insurance deductible

MORE:

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

Average monthly cost of gap insurance in Tennessee

Everything to do with insurance is subjective—it has a lot more to do with the driver and the car than the product. The same is true for gap insurance—how much it will cost depends a lot on you and the car you’re buying or leasing. That said, you can expect gap coverage from an insurance provider to cost anywhere from about $2 to $30 a month.

Unlike insurance providers, lenders and dealers typically charge a lump sum for gap insurance. That lump sum can run you up to $700. Scraping together an extra $700 while you’re trying to buy a new car is much more difficult than adding a few dollars to your monthly premium.

MORE:

How to cancel gap insurance and get a refund

Is gap insurance worth it in Tennessee?

There are a lot of reasons gap coverage is optional in Tennessee—not the least of which is that not everyone needs it. But for anyone who still owes money on a loan or lease—especially if the amount they owe is more than the vehicle’s ACV—gap insurance is probably going to be worth it.

Let’s take a look at some specific scenarios in which gap insurance can be especially valuable:

Gap insurance is a good idea if you:

Made a

down payment

of less than 20% on your new vehicle

Bought a car that depreciates quickly, like a luxury or electric car

Drive more than 15,000 miles per year

Selected a longer-than-

average loan term

(e.g. 72 or 84 months)

Rolled over negative equity from a previous car loan

In any of these situations, gap insurance is not only worth it, but it’s a great investment. It will only cost you a few dollars a month, but it could save you thousands if your vehicle is totaled.

"When using
Jerry
, I just put in a bit of information, and they found lots of different quotes for me. I was paying $305 a month for 2 brand-new cars, but now I’m paying $150 a month for both with full coverage!” —Robin U.

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