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Last updated: August 18, 2023

Gap Insurance in Florida

Cover the difference with gap insurance for your new vehicle.

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You just purchased a new car, and as you drive off the lot, a horrifying realization hits: It’s already losing value. This is the reality for most drivers, as classic cars are the only vehicles that increase in value the longer you have them.

In the event you total your car or it gets stolen before you pay off your loan, you’d still be on the hook for the price of your brand-new car, even if its value has diminished severely. Get a good night’s sleep and dream of open roads in your brand-new vehicle by purchasing gap insurance.

What Is Gap Insurance?

Guaranteed asset protection insurance, or gap insurance, is a misnomer. It’s not technically insurance but rather an amount your provider agrees to pay to cover the balance on your loan or lease in the event your vehicle is totaled or stolen. With gap insurance, your provider will pay the difference between your car’s actual cash value (ACV) and the amount you owe on your auto loan or auto lease.

Most cars lose 20 percent of their value within a year of purchase. Standard auto insurance policies cover only the ACV. If you make a small down payment when financing the purchase of a new car, a loss during the early years of ownership may mean you owe more on your loan than the vehicle’s depreciated value. Gap insurance fills in the gap.

Remember that in Florida, you need to have insurance before you register a vehicle. Because insurance will be on your mind when you’re purchasing a new car, this is the best time to think about adding gap insurance to your policy.

What It Covers

Gap insurance covers the following:

  • Vehicle theft
  • Totaled vehicles (in Florida, this means an accident resulting in a loss of 80 percent of the value)1

What It Doesn’t Cover

Gap coverage does not include the following:

  • A down payment on a new car
  • Bodily injuries and other medical costs
  • Balances carried over from previous loans or leases
  • Collision or comprehensive deductibles, typically
  • Extended warranties
  • Funeral costs
  • Lost wages
  • Overdue car loan payments or late fees
  • Security deposits
  • Total losses from mechanical issues such as engine failures

How It Works

How does gap insurance work in practice?

Example

You purchase a new car with an auto loan. You put down 10 percent — say, $3,000 — meaning you repay the remaining $27,000 with interest. Unfortunately, you total your vehicle while still owing $25,000 on your auto loan.

Your insurance provider assesses the car’s depreciated value at $21,000, which your provider agrees to pay your lender, minus your collision deductible. You would be on the hook for the remaining $4,000 if you neglected to purchase gap insurance.

NOTE:

Gap insurance pays the difference between the amount on your loan and the amount your insurance company will cover for a collision, a theft, or an event such as a tree falling on your car, based on its ACV. That money goes directly to your auto lender to pay off your totaled car. If you need help replacing the vehicle, consider adding new-car replacement coverage when you purchase your vehicle.

The Cost of Gap Insurance in Florida

The cost of gap insurance in Florida depends on several factors. The cheapest way to purchase gap insurance is as an add-on to a full-coverage car insurance policy. If you purchase it separately, you should buy it from an insurance company — not from a manufacturer, dealership, or lender — to get the best rates.

Type of gap insurance Average annual cost
Add-on to existing full-coverage policy $50
Manufacturer $450
Stand-alone from a dealership/financial institution $450

FYI:

You qualify for gap insurance only if you already purchased comprehensive and collision coverage on your policy.

Gap Insurance Companies

Which company should you buy gap insurance from in Florida if your car is totaled or stolen? Because many personal details and demographics affect the cost of car insurance, the cheapest provider for you may not be the same for someone else. In other words, take the average prices below with a grain of salt. You need to request a quote from the insurer to determine your rate.

Company Average annual cost of gap insurance in Florida
GEICO $2,734
Nationwide $1,344
Travelers $2,053
State Farm $2,793
Farmers $2,914
Mercury $2,943
Progressive $3,168
National General $3,769
Liberty Mutual $4,584
Allstate $4,796

By City

Where you live affects your average car insurance costs in Florida. Larger cities, like Miami and Tampa, typically have higher auto and gap insurance rates.

City in Florida Average annual cost of gap insurance
Miami $3,499
Hialeah $3,451
Aventura $3,273
Tampa $3,255
Fort Lauderdale $3,080
St. Petersburg $2,869
Clearwater $2,628
Jacksonville $2,467
Orlando $2,428
Palm City $2,369
Port St. Lucie $2,326

By Age

Generally, Florida car insurance is the cheapest for someone in their 40s and the most expensive for young drivers with little or no driving experience.

Age Average annual cost of gap insurance in Florida
20s $6,284
30s $3,134
40s $2,923
70s $3,053

Gap Insurance Laws in Florida

The Florida Legislature considers gap insurance a form of credit insurance. The Department of Financial Services must license and fingerprint any owners or principals of a business selling gap insurance.2 To get a license to sell gap insurance in Florida, the person must be one of the following:

  • An officer, salaried representative, or commissioned representative of a life or health insurance officer who is not licensed as an agent to sell other classes of life or health insurance
  • An employee or associate of a lending institution, financial institution, or creditor who can sell gap insurance only to those who use the institution to finance their vehicle

How Much Gap Insurance Do You Need?

The amount of gap insurance you get should equal your car’s purchase price, such as how much you paid for it. With the exception of classic cars, which appreciate in value, vehicles lose value as soon as you drive them off the lot.

If your car’s ACV is less than the cost of repairs, your insurance company will declare it a total loss, and you’ll be left financially responsible for the remaining amount on your loan or lease. Covering your car’s purchase price through gap insurance ensures you will be responsible only for the deductible.

Is Gap Insurance Worth It?

Gap insurance is usually worth it, but it does not make sense for all drivers. So who is gap insurance best for?

Who Should Buy Gap Insurance?

You should consider gap insurance if you meet at least one of these criteria:

  • You made a down payment of less than 20 percent when you financed your vehicle.
  • You owe more on your car than it’s worth, meaning you have negative equity on your loan.
  • You financed for 60 months or longer.
  • You lease your vehicle. (Most lessors require gap insurance.)
  • You rolled over negative equity from an old car loan into your new car loan.
  • You drive a vehicle that depreciates faster than average, such as a Ferrari.

TIP:

What is your car’s ACV? Check its value on Kelley Blue Book,3 Edmunds,4 or J.D. Power.5 Typically, you should purchase gap insurance if your loan balance is higher than your vehicle’s depreciated value.

Who Should Not Buy Gap Insurance?

In general, you can skip gap insurance if you meet at least one of these criteria:

  • You own your car outright.
  • You made a down payment of more than 20 percent when you financed your vehicle
  • You plan to pay off your car in less than five years.
  • You drive a vehicle that holds its value or appreciates, like a classic car.

How to Buy Gap Insurance

Buying gap insurance can be different from getting car insurance, as you have more vendors to choose from.

When to Get Gap Insurance

Your vehicle begins depreciating as soon as you drive it off the lot. However, it is typically more cost-effective to purchase gap insurance with your auto insurance policy and not from your car dealership. Purchase gap insurance as soon as possible after you buy a new vehicle, and remember that some insurers limit how old your vehicle can be to qualify for gap insurance. In some cases, the following must be true for you to get gap insurance:

  • You are the original owner of the vehicle (i.e., you have the original lease or loan).
  • The vehicle is less than three model years old.

Best and Cheapest Companies in Florida

Based on our research, the cheapest gap insurance in Florida comes from GEICO, Nationwide, and Travelers. Remember that your quote will be specific to your circumstances, so shop around. In general, our pick for the best auto insurance companies in Florida is State Farm, but we also recommend Direct Auto Insurance for high-risk drivers.

Conclusion

With new-car prices as high as they are, most people use loans to purchase vehicles, or they lease them. If that’s the case for you, gap insurance is in your best interest, even in the no-fault state of Florida.

Frequently Asked Questions

Is gap insurance required in Florida?

No, gap insurance is not required in Florida (or in any U.S. state). However, many lease and loan agreements require gap insurance. You can drop it once your car loan amount becomes lower than the car’s value (positive equity).

What are the cons of gap insurance?

The cons of gap insurance include the cost and limitations on availability. It is expensive to purchase gap insurance, especially if you buy it from a dealership or financial institution such as an auto loan provider, and it adds to your upfront and monthly car payments. Not all car companies offer gap insurance, and you can only purchase it for new cars — so research it before you purchase a vehicle.

How does gap insurance work in Florida?

Gap insurance in Florida works much like it does in other states: The entity you purchase gap insurance from agrees to pay the difference between your car’s depreciated value and the amount remaining on your loan or lease, less your deductible, in the event of a total loss.

Citations

  1. 2020 Florida Statutes. The Florida Senate. (2020).
    https://www.flsenate.gov/Laws/Statutes/2020/626.321

  2. Total Loss Threshold By State. AppraisalEngine. (2023).

    Total Loss Threshold by State

  3. Car Values. Kelley Blue Book. (2023).
    https://www.kbb.com/car-values/

  4. How much is my car worth: Instant used car value and trade in value. Edmunds. (2023).
    https://www.edmunds.com/appraisal/

  5. Research by Body Style. JD Power. (2023).
    https://www.jdpower.com/cars