If you are a Florida driver, it is important to understand guaranteed asset protection (GAP) insurance. Florida does not require gap insurance as a form of auto insurance, but your lender may require it if you take out an auto loan.
If you’re a driver in Florida financing or leasing a new car, you may be wondering – is gap insurance required? The short answer is no, gap insurance is not legally mandated in the Sunshine State. However, your lender or lease company will likely require it. I’ll explain more about gap insurance in Florida, including when you need it, how it works, and where to buy it.
What is Gap Insurance?
Also known as guaranteed asset protection or GAP insurance, gap coverage helps pay the difference between what your car insurance pays if your vehicle is totaled or stolen and what you still owe on your auto loan or lease.
For example let’s say you buy a new $30000 car but finance it over 6 years. After a year, you’re in an accident that totals the car. Your insurer determines the car is only worth $22,000 at the time and pays that (minus your deductible). But you still owe the bank $27,000. Gap insurance would cover the $5,000 difference so you don’t end up making payments on a car you no longer have.
Gap insurance is important because cars depreciate quickly. You could end up “upside down” on your loan very fast, owing more than the car is worth. Gap coverage protects you in this situation.
When Do You Need Gap Insurance in Florida?
Gap insurance isn’t mandatory in Florida, but many lenders and lessors require it They want to ensure the loan is repaid if the car is totaled You’re especially likely to need gap if
- You put less than 20% down
- Your loan term is over 60 months
- You got a high interest rate
- You rolled negative equity from a prior loan into this one
For used vehicles, gap insurance eligibility depends on the car’s age – many insurers require cars be less than 2-3 years old. Ask your insurance agent if gap could be added to your specific used car.
Gap insurance also differs from new car replacement coverage that some insurers offer. That pays to replace your new car with a new one – gap just pays the loan difference. Some insurers offer one or the other, while others offer both options.
How Does Gap Insurance Work in Florida?
Gap insurance only pays if your vehicle is totaled before the policy expires – it doesn’t cover repairs. Here’s a quick rundown of how it works if your car is totaled:
- Your primary auto insurance determines the car’s actual cash value (ACV) and pays that minus your deductible.
- If you owe more on your loan than the ACV payout, gap insurance pays the difference directly to the lender.
- This zeroes out the loan balance so you don’t have to continue paying on a totaled car.
One important note – if you have a leased vehicle, the gap insurance payout would go to the leasing company, not a bank. But it serves the same purpose of eliminating further payments.
Where To Buy Gap Insurance in Florida
You’ll likely be offered gap coverage by the dealer when buying a new car. But it’s usually cheaper to add to your existing auto policy. Most major insurers in Florida offer gap:
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Allstate – Available if you’re the original owner/leaseholder. Allstate has strong financial ratings.
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Liberty Mutual – Must be first owner and add at purchase. Decent ratings but below average satisfaction scores.
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Progressive – Coverage won’t expire as long as you stay insured with them. Strong financials but mixed satisfaction.
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Travelers – For original owners buying from a dealership. Very strong financials but below average satisfaction.
State Farm also has a similar “payoff protector” product for loans through State Farm Bank.
I recommend getting quotes from a few companies to find the best gap insurance rate in Florida. Adding to your current policy can save quite a bit versus buying from the dealer.
Key Questions About Florida Gap Insurance
Here are answers to some common questions about gap insurance in Florida:
Is gap insurance required on a leased vehicle in Florida?
Most lease agreements require gap coverage to protect the leasing company. However, it’s not an outright legal requirement in Florida – just part of the lease terms.
What is standalone gap insurance?
This is gap coverage from insurers specializing only in gap policies, if your current company doesn’t offer it. It can be more expensive than adding to an existing policy.
Can you cancel gap insurance?
Yes, you can cancel gap insurance anytime by contacting your insurer. Some policies expire automatically after a set timeframe. Evaluate periodically if gap is still needed.
Do I have to get gap if I finance?
No, Florida doesn’t legally require gap with financing, but your lender probably will. It’s in their interest to have the loan repaid if the car is totaled before it’s paid off.
The Bottom Line
While gap insurance isn’t mandated by Florida law, most lenders and lessors require it to protect their interests. If you’re financing or leasing a vehicle, gap coverage can be incredibly valuable by saving you from continuing loan payments on a totaled car. Be sure to shop around for the best rate.
Bodily Injury Liability Insurance
In Florida, drivers aren’t required to carry bodily injury liability (BIL) insurance. It does, however, protect you if you cause a car accident that hurts or kills someone or something. Despite the state’s no-fault system, you could still be sued for injuries your PIP insurance fails to cover.
If you drive in Florida, you should also think about getting uninsured motorist protection. Since the state doesn’t require drivers to have BIL, this is the best way to protect yourself in case of an accident.
You will be paid for injuries you get in a car accident where the other driver is either uninsured (doesn’t have insurance) or underinsured (doesn’t have enough insurance). It doesn’t pay for your car, but it might cover your medical bills, lost wages, and the cost of what you think future medical care will cost. long-term nursing care.
Florida Auto Insurance Requirements
- Personal Injury Protection (PIP): All drivers must have at least $10,000 in PIP coverage. 80% of your medical bills are covered, and 60% of your lost wages are covered if you are hurt in an accident. It will also pay up to $5,000 in death benefits no matter who caused the accident. Damage to property (PDL): Drivers must also have at least $10,000 in PDL coverage. If you damage someone else’s property in an accident, this coverage will keep you from having to pay for it yourself. It could include damage to a building, fence, tree, mailbox, road sign, or another car.
GAP Insurance | Buy from dealer or Insurance company?
FAQ
Who provides gap insurance in Florida?
Can you cancel gap insurance in Florida?
How much is gap insurance per month in Florida?
Is gap insurance Pointless?
Does Florida require GAP insurance?
Gap insurance is optional in Florida, but it may be required for an auto loan. If your car is totaled or stolen, gap coverage would pay any money you owe on the car that’s over the payout from your comprehensive or collision insurance. To buy a gap policy, most companies will require you to have comprehensive and collision coverage.
How much is GAP insurance in Florida?
But gap insurance is not cheap. The average cost of gap insurance in Florida is $2,923 per year, according to a 2023 rate analysis by Insurance.com. Gap insurance pays the difference between the amount you owe on a car loan and the car’s actual cash value – which could prove extremely valuable if you owe more on your car than it is worth.
Does state Farm offer GAP insurance in Florida?
The insurer has an A++ financial strength rating from AM Best but ranks slightly below average in J.D. Power’s 2023 study for Florida. In addition, although it does not offer traditional gap insurance, State Farm offers a similar program known as Payoff Protector for loans originated by State Farm Bank. Is gap insurance required in Florida?
Do I need GAP insurance?
Whether you need gap insurance depends on how much you have left on your car loan or lease and what the vehicle is worth. If you have enough money not to care about the “gap,” you likely don’t need gap insurance.