Best Texas GAP Insurance Coverage (2024)

Guaranteed asset protection, also known as GAP, can help pay for the difference between what you still owe on an auto loan and the actual cash value of your vehicle in the event of a total loss accident. How much does GAP insurance cost in the state of Texas? Through the dealership, Texas GAP insurance costs are usually five percent of the loan that you used to finance or lease your vehicle. (For more information, read our “Best Car Insurance for a Leased Vehicle“).

However, you can pay only a few dollars per month by purchasing your Texas GAP insurance through an auto insurance company. Keep reading to learn the best GAP insurance companies in Texas and how to best protect yourself with automobile GAP insurance.

Ready to get started? Immediately compare Texas GAP insurance quotes right now by entering your ZIP code into our free quote comparison tool above.

What are the average Texas GAP insurance coverages and rates?

What is GAP insurance in Texas? GAP insurance pays the difference between the cash value of your financed car and the remaining balance you owe on your auto loan, protecting your finances after a total loss accident.

How could you owe more than what your car is worth? Do you really need GAP insurance for your new car?

Imagine you finance a brand new vehicle. Cars depreciate by more than 10 percent of their value within the first month of ownership. So now you owe more on your auto loan than what your new vehicle is currently worth.

Now imagine you total that new car. Your auto insurance company sends you a check for the actual cash value of your car, but it is not enough to pay for the remaining balance on your loan. GAP will cover that difference. Without GAP insurance, you must pay for that amount out of pocket.

Where can you go to purchase GAP insurance? There are two major ways to invest in this type of protection. You can get GAP insurance from either the dealership or an auto insurance company. Some stand-alone companies also exist.

Take a look at the table below to see some estimates of how much GAP insurance in Texas might cost you from a dealership.

Texas Dealership GAP Insurance Rates by Vehicle Make and Model

As you can see from the data above, the more expensive the manufacturer’s suggested retail price or MSRP of your vehicle, the higher your GAP rate will be if you choose to purchase it through a car dealership. According to Kelley Blue Book, the MSRP is the price set by the car manufacturer and includes destination charges and the minimum required equipment.

Why does GAP cost so much more from a Texas dealership than from a place like Progressive, USAA, or Texas Farm Bureau GAP insurance? That’s because a dealership will usually charge you five percent of your full auto loan for GAP coverage. The Texas GAP insurance laws limit the amount of coverage to five percent.

Auto loans for vehicles are typically equal to the manufacturer’s suggested retail price or MSRP of the car. GAP policies are usually added to vehicle loans and paid to the lender as part of the monthly payments instead of paying a one-time fee.

Now you have a clearer idea of how car dealerships calculate GAP insurance rates using your vehicle’s MSRP. While GAP coverage from a dealership will cost hundreds of dollars annually, GAP coverage from an insurance company can have an average cost that is as little as $20 per year. Additionally, when GAP is included in car loan payments interest is charged on the amount paid for the policy, making it an even more expensive option.

Our expert recommendation is to buy Texas GAP insurance through an auto insurance carrier. Every insurer offers a slightly different GAP policy. For example, State Farm offers actual auto loans which include a GAP insurance policy, known as Payoff Protector. AAA Texas GAP insurance is different.

Always compare GAP policies from different auto insurers to determine which one best fits your needs.

What are the best Texas auto insurance companies for GAP insurance?

Are you wondering where to buy GAP insurance in Texas? Remember, you do not have to purchase GAP insurance from the dealership. In fact, you’ll find much more affordable rates through an insurance provider than you will from a car dealer at the time of purchase.

Most of the top auto insurance companies in Texas will likely carry GAP insurance policies. However, you may have a harder time finding small auto insurance companies with GAP insurance. Currently, there is no GEICO GAP insurance being offered.

Depending on what company you use, adding GAP coverage should only tack on an extra $60 or less annually to your auto insurance rates through an insurance provider.

How much will auto insurance from major companies in Texas cost you? Many variables go into calculating your individual rates. Your age, ZIP code, driving record, and credit history can all impact what you pay each month. To simplify things, we gathered the average annual rates of auto insurance from different companies in Texas. Take a look at the table below for more details.

Texas Average Auto Insurance Rates by Company

USAA auto insurance is the cheapest insurance company in Texas. However, only active or retired military personnel and their families are eligible to use services from USAA. State Farm and GEICO offer the next cheapest average rates.

We already know GEICO does not provide customers with GAP insurance. Does USAA offer GAP insurance? Fortunately, USAA and State Farm both offer GAP coverage as a policy add-on. The cost of gap insurance as an addition to your current policy will add extra costs to your annual premium.

For example, USAA Texas military GAP insurance will issue a check to their customer or the dealership if a car is a total loss. However, you must be sure to add GAP to your policy as it is not a part of the standard Texas auto insurance package.

Do Allstate, Nationwide, and Progressive have GAP insurance? Yes, all three insurers are GAP insurance companies but have different requirements. For example, to qualify for Progressive GAP insurance, you must also purchase comprehensive and collision coverage auto insurance.

Whatever company you use, make sure you specifically add GAP insurance to your policy so you know without a doubt that you and your financed vehicle are properly protected.

Is GAP insurance required in Texas?

Auto insurance requirements vary by state. According to Texas insurance law, a driver is required to carry minimum liability insurance with coverage limits of at least $30,000 for bodily injury of one person per accident, $60,000 for bodily injury of multiple people per accident, and $25,000 for property damage per accident.

There is no specific GAP insurance Texas law requirement. It is an optional coverage.

According to the Insurance Information Institute, only liability insurance is commonly required by state law. Liability insurance only pays for injuries and damages you cause in accidents, so you won’t receive compensation after a crash. The only way to receive money from a claim is to purchase collision and comprehensive coverage.

That being said, we can’t understate the importance of having liability insurance. As we mentioned above, liability insurance coverage pays for physical injuries and physical damage that you may have caused in accidents. The annual cost of auto insurance coverage is worth protecting yourself from unforeseen issues down the road. Not having this coverage in place could mean you might have to shell out a lot of money if you’re found at fault in an accident in which people were hurt, or property was damaged.

Let’s say, for instance, you have a lawn care company with liability insurance on all of your vehicles. If one of your workers rear-ends another person, causing damage to his or her car, liability insurance will kick in for the driver so won’t have to.

Collision and comprehensive insurance products are also not required by Texas’s minimum standards. Collision pays for property damage regardless of who’s at fault, while comprehensive coverage pays for damage that doesn’t involve a collision, like a falling object, flood, or vehicle theft.

Comprehensive coverage could also cover a total loss accident, but it depends on the company. That being said, only GAP insurance will help cover an auto loan that remains after a vehicle has been totaled.

You may hear the term full coverage be used. This refers to collision and comprehensive coverage that’s added to a liability policy. GAP can also be included from auto insurance companies that offer it.

Is GAP insurance worth buying as stand-alone insurance? Stand-alone GAP insurance is GAP insurance without the perks of other auto insurance coverage. This means no liability, comprehensive, or collision protection.

GAP insurance purchased from a stand-alone company usually costs a flat fee of $200 to $700 per year.

Who sells stand-alone GAP insurance? You’ll be able to get the best stand-alone GAP insurance rates from local or national companies that specialize in this type of coverage.

There are some stand-alone GAP insurance providers in Texas. On the other hand, a Texas GAP insurance company like Progressive is usually not a stand-alone policy but is instead part of your whole auto insurance package.

Case Studies: Best Texas GAP Insurance Coverage

Case Study 1: Sarah’s Total Vehicle Loss

Sarah recently purchased a new car and financed it with an auto loan. She opted to buy GAP insurance from the dealership when she bought the car. Unfortunately, just a few months later, she got into a severe accident that resulted in a total loss of her vehicle.

Since Sarah had GAP insurance, she was relieved to find out that the insurance covered the difference between the actual cash value of her totaled car and the remaining balance on her auto loan.

Without GAP insurance, Sarah would have been responsible for paying off the remaining loan amount out of pocket. The GAP insurance provided her with financial protection and saved her from a significant financial burden.

Case Study 2: John’s Affordable GAP Coverage

John purchased a used car and decided to shop around for the best GAP insurance coverage. He knew that dealership-sold GAP insurance could be expensive, so he looked for more affordable options. After researching various insurance companies, John found an auto insurance provider that offered GAP coverage at a much lower cost.

By purchasing his GAP insurance from the auto insurance company, John was able to save money while still ensuring that he had the necessary coverage in case of a total loss. He felt confident that his financial investment in the car was protected.

Case Study 3: Lisa’s Unexpected Total Loss

Lisa leased a brand new car and wanted to make sure she was covered in case of a total loss. She decided to purchase GAP insurance from a stand-alone company that specialized in providing this coverage. She found the process simple and straightforward, and the company offered competitive rates.

Several months into her lease, Lisa was involved in an accident that rendered her car a total loss. Thanks to the GAP insurance she had purchased, she didn’t have to worry about paying off the remaining balance on her lease. The insurance company covered the difference, allowing her to move on without any financial setbacks.

Is Texas GAP insurance worth it?

Often when it comes to insurance coverage options, you never know if you’re going to need it. However, investing in the right amount of Texas GAP insurance coverage for your vehicle is an easy and affordable way to prevent yourself from facing serious financial hardship.

You now know every detail about how GAP insurance works in Texas. If you get into an accident and your new car is totaled, Texas GAP insurance will cover the difference between what you owe on your car loan and the actual cash value of your vehicle.

Cars depreciate very quickly. As soon as you drive a car off the lot, the value of the vehicle will be less than the amount you are paying for the loan. It’s how companies make a profit by selling cars.

If you drive a newer car, and if it is early on in the life of your auto loan, there is more likely to be a bigger deficit between what your car is worth and what you still owe. If you total your car, getting a GAP insurance refund will save you from paying for that deficit out of pocket.

How long do you need GAP insurance?

Fortunately, you do not need GAP insurance forever. Once you’ve paid off enough of your loan, you can take GAP coverage off of your policy. Until then, make sure you’re not paying too much for your GAP or auto insurance policy. Always compare rates from multiple companies before signing your name on the dotted line.

Don’t wait to find your most affordable Texas GAP insurance rates. Enter your Texas ZIP code into our free quote comparison tool below to find the right GAP coverage for you and your needs.