Is gap insurance required in Maryland?

I’m taking out a car loan to buy a new car, but I know that I also need to budget for insurance. A friend told me that he had to get gap insurance, but he wasn’t sure if it was per Maryland law. Does Maryland require gap insurance?

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Answer provided by
Eric Schad
Answered on Jun 15, 2022
Gap insurance isn’t required in Maryland, so at the least, you can be on the winning side of an argument with your friend.
That said, getting gap insurance might make sense for some car buyers. As soon as you drive the car off the lot, you lose about 10% to 11% of the value of the car. However, this isn’t reflected in your car loan balance.
If you get into an accident and your car is totaled, you’re on the hook to pay the difference. With gap insurance, you don’t have to. If you’re considering a 72-month loan or longer, gap insurance is probably a good investment, as you don’t reach your break-even point for four to five years.
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