Does USAA Have Gap Insurance?
USAA doesn’t offer gap insurance, but they do offer total loss protection. Here’s what you need to know.
Written by Bonnie Stinson
Reviewed by Kathleen Flear
Instead of gap insurance, USAA offers a policy called total loss protection. If your vehicle is totaled, this coverage pays for the gap between your totaled car’s actual cash value and the amount you still owe on your loan.
Finding the right
car insurance
coverage can be tricky. You want protection for your assets but don’t want to pay for unnecessary coverage. Gap insurance, or total loss protection, is pretty affordable—but you have to be a member of the military or a military family member to qualify for USAA gap insurance.Keep reading to learn how gap insurance works, what it covers, where to buy it, and whether or not it’s worth buying.
Does USAA offer gap insurance?
No—but USAA does offer a comparable insurance policy called total loss protection.
Gap insurance
(Guaranteed Asset Protection), which USAA does not technically offer, is a policy that protects your assets if your leased or financed vehicle is totaled or stolen and you are upside down on your car loan
— meaning you owe more on the loan than the car’s value. With gap insurance, the policy will pay the “gap” between the car’s actual cash value (ACV)
and the amount you still owe on the car. Gap coverage is a popular option for people who purchase new cars.Total loss protection, which USAA does offer, is a very similar coverage. It pays for the difference between your vehicle’s value and your remaining loan balance up to $50,000. You are only eligible for this coverage if your car is less than seven years old and if your loan balance is at least $5,000. Plus, it’s only available to existing USAA customers who financed their vehicle through USAA.
Without this coverage, you could wind up owing money on a car you no longer own if it gets destroyed or stolen. You're especially vulnerable if you have a longer loan term or made a smaller down payment.
Let’s say you bought a new car a few years ago with a loan for $40,000. Today, the ACV of the car is $20,000 due to depreciation, but you have a loan balance of $24,000. Collision and comprehensive coverage will only pay for the car’s actual cash value if you total a financed car. So, you’ll be compensated for the $20,000 car that was damaged—but you’ll still owe $4,000 out of pocket to close out your car loan.
Note that fault is not a factor with gap insurance.
How does gap insurance work with USAA?
Total loss protection with USAA is an affordable add-on to your full coverage policy. Full coverage means that you have
collision
and comprehensive
insurance and these coverages are required for your car to be eligible for total loss protection. Here’s how it works with USAA:
- You purchase USAA’s total loss protection for your leased or financed vehicle
- Your vehicle is totaled or stolen, so you file a claim and provide your bill of sale, odometer statement, and certificate of title
- A claims adjuster will assign a value to your pre-incident vehicle
- USAA will issue a check for the car’s ACV, minus your deductible
- USAA will take possession of your totaled vehicle
Be aware that USAA insurance is only available to eligible military members and their families. If you already have USAA coverage, just ask your agent about adding gap coverage. If you’re eligible but not currently a customer, then call USAA or get
car insurance quotes online
that include total loss protection.USAA also offers a related product called Car Replacement Assistance (CRA). Their CRA program will pay out 20% more than your car’s actual cash value.
Is it better to buy gap insurance from the dealership or your insurance company?
You can usually buy gap insurance from the dealership or from your insurance company. However, the cost may differ depending on where you buy your insurance.
With in-house financing at a dealership, gap coverage is usually automatically wrapped into your loan agreement. While this sounds good, it means you’ll pay interest on this flat fee and your car loan.
Another option is to get an
auto loan from a credit union
and purchase gap insurance through your lender instead of the dealership. Buying gap coverage or total loss protection from a car insurance company is usually cheaper and easier. You can add this coverage to your existing policy for between $20 and $40 per year.
Remember—if you want to get total loss protection from USAA, you must finance your vehicle through USAA to be eligible for this coverage.
Is gap insurance worth it?
To decide whether you need gap insurance, look closely at your loan agreement and the value of your car.
If you have a high interest rate, longer loan term, or made a low or no deposit, then you might risk your assets if your car gets totaled—and you might want to consider purchasing gap insurance.
Lenders can require you to carry gap insurance on a leased car. However, it’s not required by law. Ultimately, gap insurance is a pretty affordable way for car owners to protect their hard-earned money.
How to find the best gap insurance
Some insurance companies don’t offer gap insurance. Even major companies like State Farm and GEICO don’t provide this type of coverage!
If you are determined to purchase gap coverage, compare quotes from multiple providers that have it available. Once you qualify for as many discounts as possible, you might be surprised how easy it is to find
cheap car insurance
that includes gap coverage.“Jerrywas a great experience. It was my first time buying insurance, and they took their time explaining a lot of insurance terms for me. Shopping around for quotes was super easy!” —Dakota F.
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