How to Get Cheap Gap Insurance in Texas
- AAA is Texas’ cheapest car insurance company for gap coverage.
- Loan providers often also have good deals on gap protection.
- It’s good to get a gap plan you can cancel when you no longer need it.
Texas’ cheapest gap insurance companies
AAA is the cheapest car insurance company for gap insurance in Texas. It charges an average of $296 a month for full coverage Full coverage includes collision and comprehensive, which cover your own car for damage and theft. with gap coverage. At $333 a month, Mercury has the next-cheapest rate.
Cheapest full coverage with gap insurance
| Company | Annual rate | LendingTree score | |
|---|---|---|---|
 | AAA* | $296 |  |
 | Mercury | $333 |  |
 | Progressive | $386 |  |
 | Nationwide | $477 | |
*AAA membership required. Dues begin at $48 a year.
Your actual rate depends on factors like your driving record, credit and vehicle. You can often save money when you compare car insurance quotes from multiple companies.
How does gap insurance work in Texas?
Gap insurance is also known as guaranteed asset protection for car loans and leases. It covers the potential shortfall between your normal insurance coverage and the amount you still owe for your vehicle.
Full coverage car insurance covers your vehicle at its actual cash value, or resale value. Unfortunately, new cars lose value quickly. In the early years of a loan or lease, your car’s value may drop below the amount you owe for it.
If your car is totaled or stolen during this time, your normal insurance check won’t pay off your entire loan or lease. The difference can sometimes add up to a few thousand dollars. Gap insurance protects you from having to pay that amount out of your own pocket.
Who offers gap insurance in Texas?
Car insurance companies, car loan providers and car dealerships all offer some form of gap protection in Texas. Leasing companies sometimes include gap coverage in your lease.
- If your insurance company has gap insurance, you can add it to your policy for a small fee. However, many Texas car insurance companies don’t offer gap insurance.
- Many lenders offer gap waivers as an add-on to an auto loan. These are also known as debt-cancellation agreements. They are similar to gap insurance.
- Your car dealership may also offer gap coverage. These plans vary. Some are standalone insurance products. Others are gap waivers.
How much does gap insurance cost in Texas?
Gap insurance itself only adds an average of $12 a month to a typical Texas car insurance policy. The cost is folded into your normal insurance payments. You can remove the coverage whenever you want.
The cost of lender-issued gap protection often ranges from $550 to $700 for the life of a loan. This works out to less than $12 a month for a five-year loan. You usually have to pay in full for these plans up front. However, lenders often let you cancel early and get a prorated refund for unused coverage.
How to compare Texas gap insurance plans
Along with price, it’s important to compare cancellation and payment terms in any gap plan you consider.
Why cancellations matter for gap insurance
An easy cancellation process lets you stop paying for gap insurance when you no longer need it. This is important because you rarely need gap protection for the life of a loan.
If you keep up with your payments, you’ll eventually owe less for your car than it’s worth You can find estimates of your car’s resale value on sites like KBB.com. . You don’t need gap protection after this.
- When you add gap coverage to your car insurance, you can remove it from your policy at any time.
- Most Texas lenders let you cancel a gap waiver before your loan term ends. You usually get a refund for unused coverage beyond your cancellation date.
Regardless of provider, it’s good to make sure the gap plan you choose lets you opt out without excessive fees.
Price factors for Texas gap insurance
It’s important to weigh the entire cost of car insurance gap coverage to the price of other offers.
Adding gap coverage itself to your car insurance is usually cheap. However, many Texas car insurance companies don’t offer gap insurance. This may force you to switch to a more expensive company just to get gap coverage.
- Switching to a company that charges you $20 more a month than your current company is like paying for a $1,200 lender plan. In this scenario, a cancellable lender plan that costs less may be a better deal.
- On the other hand, switching companies for gap coverage is a good deal if it adds $10 or less to your monthly bill. Costwise, this is comparable to a $600 lender plan.
Payment options for gap insurance
Car insurance companies have easier payment terms than most other gap providers. The cost of gap insurance is folded into your normal car insurance bill, whether you pay in full or in installments.
Many lenders require you to pay up front for gap waivers for your entire loan term. You can usually roll this cost into your car loan. However, you’ll have to pay interest on the coverage if you finance it this way.
Is gap insurance worth it in Texas?
Gap insurance is often worth it in Texas if you finance a newer car with a low down payment. It’s usually cheap, as long as you cancel your plan when you no longer need it.
You probably don’t need gap insurance if your down payment or trade-in is at least 20% of your vehicle’s purchase price. Gap insurance is usually not worth it for older cars, either. Older cars don’t lose value as quickly as new ones do.