Everything You Need to Know About Honda Gap Insurance
Guaranteed Auto Protection (GAP) insurance can protect your leased or financed Honda if it’s deemed a “total loss.”
Written by Kaitlin May
Reviewed by Kathleen Flear
Whether you lease or own a Honda, Guaranteed Auto Protection (GAP) insurance can cover your vehicle if it’s considered a “total loss” in an accident, theft, or natural disaster.
Any Honda you lease or buy loses value the second it's driven off the lot. In either case, an accident that results in irreparable damage to your car can be an insurance nightmare.
If you don’t have additional coverages in your policy, insurance companies can only replace an owned Honda at its
actual cash value (ACV)
. Leased Hondas can be even more complicated in this scenario.Thankfully, licensed insurance broker and super app
Jerry
is breaking down everything you need to know about GAP insurance for your Honda, including what Honda GAP insurance covers, how much it costs, and whether your Honda lease should include GAP insurance.RECOMMENDED
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What is GAP Insurance?
Guaranteed Auto Protection (GAP) insurance
is the bridge between your leased or financed car’s market value and the remaining balance on your contract. Having GAP insurance can ease your mind when your insurance company writes off your car as a “total loss” after an accident—especially if you’re leasing the vehicle. This coverage provides a safety net for your finances that prevents you from spending more on repairs than the car is worth.
Why should I get GAP insurance?
When you lease a car, you’re not taking full ownership over it, so dealerships typically offer GAP insurance to cover potential damage. It benefits you to have that protection if you’re in a collision or your car is stolen.
Many dealerships will offer GAP insurance for your Honda when you decide to finance it as well. Since the value of your shiny new ride depreciates by about 11% as soon as you start driving it, your insurance will only cover its actual cash value (ACV) when it’s totaled.
When damages or replacement costs are added to your principal and
interest payments
, they can cause significant financial strain. Having GAP insurance will prevent you from owing your lender a steep amount of money to cover unexpected pitfalls.How does GAP insurance work for a leased vs. owned Honda?
GAP insurance will pay out the amount between the car’s current value and the amount you still owe on your payments if you lease a Honda that’s stolen or damaged beyond repair.
The process is similar when it comes to financing a new car, like a Honda Civic. If the car’s initial value is around $20,000 and you make a 10% down payment of $2,000, your loan will cost about $18,000, depending on interest rates and other factors.
If your financed Honda is totaled months later and you still have a large chunk of payments remaining on the loan, your insurance company will only cover the depreciated value of your car. That could leave you owing thousands more for damages on the vehicle, which will increase your monthly payments.
GAP insurance would payout the difference created by the car’s damages, so you wouldn’t be responsible for filling in the, err, gaps.
Whether you’re leasing or owning your Honda, GAP insurance will ensure that your monthly payments remain the same when there’s severe damage done to your car.
What are the advantages of having GAP insurance for my Honda?
Beyond providing peace of mind in the event of theft or a debilitating accident, GAP insurance can offer the following:
- Reimburses a balance of up to $50,000 for losses
- Pays out up to 150% of MSRP for new vehicle loan amounts
- Removes the financial risk of negative equity when a car is totaled
- Offers the option for a customer to get a new vehicle with a cleared loan balance
- Protects customers from defaulted loan payments and credit issues
- Provides a cancellation and refund option if the car is sold or traded
How much does Honda GAP insurance cost?
You can either purchase GAP insurance for your Honda through your dealership, a bank, or your insurance company. There’s an option to pay for it outright for a cost between $400 and $700 plus interest. You can also make annual payments, which typically cost between $20 and $40.
Several factors could affect the amount you’ll pay, including:
- Your demographics and driving record
- The ACV of the vehicle when it was purchased or leased
- The state where the GAP insurance is purchased
When do I need to get GAP insurance for my Honda?
If you’re offered GAP insurance for your Honda, you should strongly consider purchasing it if:
- Your down payment was less than 20%
- You have a loan term of 72 months or longer
- You’re financing a vehicle with a fast depreciation rate (unique options, etc.)
- Your new loan includes negative equity from a previous auto loan
- You’re leasing your car
Can I skip GAP insurance for my Honda?
If you don’t fall into any of the above categories, you may not feel like GAP insurance is right for you and your Honda. You can feel confident in that decision if you consider yourself to check the following boxes:
- You paid a down payment of 20% or more
- You’re paying off the balance with a short loan term
- You have the funds to repair or replace a totaled vehicle
Once you’ve approached the end of a lease term or have owned your car for longer than two or three years, GAP insurance is no longer worth the investment. It’s most valuable in the early stages of a lease or financed purchase.
How to find the right insurance for your vehicle
Any newly leased or financed car needs to have the right car insurance policy. GAP insurance can be helpful, but to be fully protected, you also need to have solid
collision
and comprehensive
coverage to be fully protected. With the car insurance comparison and broker app Jerry
in your corner, you can find a policy that includes all the coverage you need for the cheapest Honda car insurance cost
.Simply sign up and select a competitive policy from over 50 top insurance companies, and Jerry will fill in the gaps. You won’t have to do any shopping, file any paperwork, or make any phone calls to get yourself switched over to a more affordable policy and have your old one canceled.
GAP insurance won’t be the only cost-conscious addition to your insurance plan—Jerry users save an average of $887 per year on their payments!
“A seamless process and a fantastic app!Jerrysaved me over $2000 on car insurance. I would recommend it to anyone and everyone.” —Osvaldo B.
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