Gap insurance calculator
Find out if you have a coverage gap between what your car is worth and what you still owe on your loan.
Gap insurance calculator
Find out if you have a coverage gap between what your car is worth and what you owe.
Check Kelley Blue Book or Edmunds for your vehicle's current value.
This is an estimate for informational purposes only based on national and state averages. Actual rates vary by insurer and individual circumstances. For an accurate quote, contact a licensed insurance agent.
The depreciation problem gap insurance solves
A new vehicle loses roughly 20% of its value the moment it leaves the dealership lot. After one year, total depreciation often reaches 25-30%. Yet auto loan payments are structured to reduce the balance slowly in the early years — the majority of early payments go toward interest, not principal. This creates a window where you owe significantly more than the vehicle is worth.
The total-loss scenario
If your car is totaled in year one, your collision coverage pays the actual cash value — what the car is worth today. If you paid $35,000, the car might be worth $26,000 after one year. But you might still owe $31,000 on your loan. Your insurer writes you a check for $26,000. The lender gets paid $26,000. You still owe $5,000 — on a car you no longer have. That is the gap.
When gap insurance is not needed
Once your loan balance drops below your vehicle value, gap insurance provides no benefit. This typically happens 2-4 years into a standard loan, though it depends on your depreciation rate, loan term, and down payment. Once this calculator shows no gap, remove gap coverage from your policy to save the modest but unnecessary premium.