Is Honda Gap Insurance Worth It?
Is Honda’s Guaranteed Auto Protection (GAP) better than the gap coverage from your car insurance company? (Spoiler: likely not.)
Written by Jason Tushinski
Reviewed by Pat Roache
Honda offers Guaranteed Asset Protection (
GAP Insurance
) that will pay or waive the difference between your vehicle’s actual cash value and the amount you owe on your car loan
or lease agreement in case your Honda is totaled in an accident.If you’re in the process of financing a new Honda, your dealer will likely offer your gap insurance. This article has everything you need to know about whether or not Honda Gap Insurance is worth it for you and how to get the same (if not better) protection added to your primary
car insurance
policy.How does Honda GAP work?
Honda’s Guaranteed Asset Protection coverage is usually offered by Honda dealerships on the purchase of new cars, along with benefits like
extended warranty coverage
and roadside assistance
.If you buy gap insurance through Honda, the Japanese automaker will likely waive or pay the difference between the depreciated value of your vehicle and the amount you still owe on your loan or lease agreement if your Honda is totaled shortly after purchase.
Honda’s
gap insurance covers theft
and natural disasters. If someone steals your Honda, your gap coverage will lower or cover any remaining balance you have on the vehicle. Honda’s gap insurance also covers up to $1,000 in deductible coverage—this means Honda gap coverage will pay most or all of your insurance deductible in case your Honda is totaled.You can buy gap insurance through Honda, but only at the time you finance your vehicle. If you choose to do so, you can pay a lump sum or add the cost to your monthly loan or lease payment—but this will make it subject to interest.
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How much does Honda GAP cost?
On average, gap insurance through Honda will cost anywhere between $400 and $700 to add to your car lease or loan.
Honda GAP vs. alternative gap insurance
If you don’t want to buy Honda gap insurance, you can always buy guaranteed asset protection through your primary car insurer. Most major insurance companies like
Progressive
, GEICO
, and State Farm
offer gap insurance. So, is there a better option? It might be easy and convenient to add gap coverage to your Honda at the time of purchase, but it’s not always the most cost-effective choice. Take a look at the table below which lists the pros and cons of buying gap insurance through Honda vs. adding it to your own primary car insurance.
Honda Guaranteed Auto Protection | Gap coverage from your auto insurance company | |
|---|---|---|
When can you buy it? | Only available for purchase at the time of financing | Available so long as your lease or loan balance is higher than your Honda’s actual cash value (ACV), you are the vehicle’s first or second owner, and the vehicle meets your insurance company's age and mileage requirements. This usually means the car is less than three years old and its mileage is low |
How much does it cost? | $400 to $700 | $20 to $40 per year |
Cancellation policy? | Cancellation only within the grace period | Can cancel any time |
Refund policy? | Limited refunds are possible | Refunds are standard |
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Do you need gap insurance?
GAP insurance offers solid financial protection when your Honda is new and you owe more for the car than it’s worth. That said, gap insurance isn’t a requirement, and it's not always worth it.
If you are leasing or financing a Honda, your lease contract or loan agreement likely will require gap coverage—either through Honda or your insurer. But gap insurance is still a good idea to have even if your financier doesn’t require it.
A new Honda begins depreciating the moment you start using it. If you buy a
2023 Honda Civic
for $26,145, its market value will drop roughly 15% over the first two years, meaning you’d have an upside-down loan
. In case your Honda is deemed a total loss, gap coverage ensures you won’t be left with an outstanding balance on a car you can’t drive.That said, if you have a very short loan, or you put more than 20% down on your vehicle purchase, paying more for gap insurance likely won’t be worth it. If you’re buying a used vehicle, gap coverage usually isn’t necessary, unless the vehicle you’re buying is a rare or collectible used car.
How to cancel Honda GAP insurance
If you want to cancel the gap insurance you buy from Honda, you’ll have to call the dealership where you purchased it. You’ll likely be able to cancel, but ultimately this will be up to the dealer’s discretion, likely based on how much time has elapsed since you bought Honda gap insurance. Be sure to check the terms of your lease or loan agreement about cancellation deadlines.
If you’re looking to save both time and money while purchasing your new Honda, do some legwork first—get a quote ahead of time from your insurer for a car insurance policy that includes gap coverage. Doing so will allow you to show up to the Honda dealership with
proof of insurance already on your phone
, so you’ll be able to buy Honda’s gap coverage or decline it, quickly.What is the Honda gap insurance refund process?
You’ll have to get in touch with your Honda dealership to get specific details on the refund process for gap insurance. If you trade your Honda in, return a leased car, or sell it, you may be able to get a prorated refund on your unused gap coverage.
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