Is Toyota Gap Insurance Worth It?
Is Toyota’s Guaranteed Auto Protection (GAP) better than the gap coverage from your car insurance company? (Spoiler: probably not.)
Written by R.E. Fulton
Reviewed by Kathleen Flear
Guaranteed Auto Protection (
GAP insurance
) from Toyota will pay or waive the difference between the auto insurance settlement for a totaled car and the amount you still owe on your loan or lease—but it’s cheaper to buy gap insurance through your car insurance provider.If you’re about to buy a Toyota, your dealer will likely offer you Guaranteed Auto Protection. Here’s what you need to know about this coverage, who it’s right for, and how to get the same protection from your car insurance company.
How does Toyota GAP work?
Toyota Guaranteed Auto Protection is a type of insurance coverage offered by Toyota dealerships for all new vehicle purchases along with other benefits like
roadside assistance
and extended warranty coverage
.If you choose to purchase Toyota GAP, Toyota will waive or pay the difference between your car insurance settlement and your remaining loan or lease balance if your vehicle is totaled shortly after purchase.
Toyota GAP also
protects against financial losses from theft
. If your Toyota is stolen, your gap coverage will either reduce or eliminate any remaining balance on the stolen vehicle. Finally, GAP includes deductible coverage up to $1,000, which will pay all or part of your auto insurance deductible in the case of a total loss.When you purchase a new vehicle, Toyota’s gap coverage is only available at the time of financing. You won’t be able to add this coverage afterward if you change your mind down the road. If you do choose to add gap coverage, you can purchase it for an up-front lump sum or bundle it into your total loan amount.
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How much does Toyota GAP cost?
On average, Toyota charges between $750 and $1,000 to add GAP to a car loan or lease contract.
Toyota GAP vs. alternative gap insurance
You can also purchase similar gap insurance—guaranteed asset protection—through your insurance company. Most major insurance providers, including
GEICO
, State Farm
, and Progressive
, offer gap insurance.So which is better? While adding Guaranteed Auto Protection to your financing deal with Toyota Financial Services (TFS) is convenient, it’s not always the most cost-effective option. The table below compares the benefits and drawbacks of buying Toyota’s gap insurance vs. adding it to your regular car insurance policy.
Toyota Guaranteed Auto Protection | Gap coverage from your auto insurance company |
|---|---|
Only available at the time of financing |
|
$750 to $1,000 | $20 to $40 per year |
Cancellation only during the grace period | Cancel any time |
Limited refunds | Refunds are standard |
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Do you need gap insurance?
While gap insurance offers great financial protection during the period when you owe more than your new car is worth, it’s not required in most instances—-and it isn’t always worth it.
Many lease contracts require the lessee to purchase gap coverage, either through the dealership or through their own insurance company. If you’re leasing, check the terms of your contract to see whether or not you need gap insurance.
For new Toyota purchases, on the other hand, lenders don’t typically require gap insurance, but it’s still worth the added cost. Remember, depreciation starts as soon as you drive your new car off the lot. If you purchase a
2022 Toyota Corolla
for $24,275, it will lose approximately 15% of its market value in the first two years, leaving you with an upside-down loan. Gap insurance covers you with the peace of mind that comes with knowing you won’t be left with a deficiency balance in the event of a total loss.However, if you have an especially short loan term or made a down payment of more than 20% of the car’s value, the added cost of gap insurance might not be worth it. It’s also usually not necessary for used vehicles unless you’re buying a rare or valuable used car.
How to cancel Toyota gap insurance
If you purchase Toyota GAP, you can cancel it within 30 days of purchase and receive a full refund. If you need to cancel the coverage after the 30-day grace period, you might be out of luck.
Check the terms of your loan agreement or call your dealer to negotiate a cancellation if you missed out on the grace period.
If you are looking for ways to save time and money while buying your new Toyota, get a quote for your car, including your insurance carrier's GAP insurance, ahead of time. This way, you can show up to the dealership with your
proof of car insurance on your phone
and be prepared to decline or accept the Toyota gap insurance.What is the Toyota gap insurance refund process?
If you cancel your Toyota GAP coverage within 30 days of purchase, you’re eligible to receive a full refund. But there’s another way to get a refund on some of the gap coverage you purchased through Toyota—if you return your lease or sell the car. In this case, you’ll be able to receive a prorated refund on your unused GAP.
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