What Is Gap Insurance Coverage? 

Gap insurance (often called lease or loan gap coverage) is a type of auto insurance that can help pay the difference between your car’s actual cash value (ACV) and the amount you still owe on your loan or lease if your vehicle is totaled or stolen.

For example, if you owe $22,000 on your loan and your vehicle’s ACV is $17,000 at the time of damage, your policy will cover the $5,000 difference.

How Do I Check if My Lease Includes Gap Coverage?

The following steps can help you verify if your lease has gap coverage:

1. Read your lease agreement. Look for terms such as “gap coverage” or “gap waiver”.
2. Ask your dealer or leasing company.
3. Check your auto insurance policy’s declaration page for anything labeled “gap”, “loan/lease payoff” or “auto loan/lease coverage.”.

Can I Add Gap Coverage After Leasing?

You might be able to include gap coverage after you get your lease, but it may depend on your provider.

Insurers may let you add gap coverage, but only within a certain window, such as a set period after the lease starts or while your vehicle is still new or nearly new, and you carry comprehensive and collision coverage.

Some dealers or lessors may only offer gap at the time you sign the lease. Others may allow you to purchase a separate contract or waiver shortly after, but usually not far into the lease.

In some areas, there are standalone gap contracts sold by finance companies or specialty providers. These are usually:

• Separate from your auto policy
• Paid upfront or rolled into payments
• Subject to time and mileage limits

We can help you further understand what gap coverage is and find the best policy that will align with your needs and budget. Contact Lancaster Insurance Agency now for a personalized quote.

This blog is intended for informational and educational use only. It is not exhaustive and should not be construed as legal advice. Please contact your insurance professional for further information.