When you buy a new car, your lender or dealership may require you to buy gap coverage. You may even have the option to purchase it immediately at the time. However, it never hurts to research what you’re buying, shop around and compare quotes when it comes to insurance.


Compare rates and save on auto insurance today!

ZIP code
Close X
Advertising Disclosure
This advertisement is powered by Coverage.com, LLC, a licensed insurance producer (NPN: 19966249) and a corporate affiliate of Bankrate. The offers and links that appear on this advertisement are from companies that compensate Coverage.com in different ways. The compensation received and other factors, such as your location, may impact what offers and links appear, and how, where and in what order they appear. While we seek to provide a wide range of offers, we do not include every product or service that may be available. Our goal is to keep information accurate and timely, but some information may not be current. Your actual offer from an advertiser may be different from the offer on this advertisement. All offers are subject to additional terms and conditions.

Compare auto insurance rates

Answer a few questions to see personalized rates from top carriers.
Caret DownCaret Up
Please select age

Save on auto insurance with quotes from trusted providers like:


Drivers switch & save an average of $750+/year

Liberty Mutual

Are you overpaying for auto insurance?


Safe drivers choose Allstate®

Powered by Coverage.com (NPN: 19966249)
Insurance Disclosure

Coverage.com, LLC is a licensed insurance producer (NPN: 19966249). Coverage.com services are only available in states where it is licensed. Coverage.com may not offer insurance coverage in all states or scenarios. All insurance products are governed by the terms in the applicable insurance policy, and all related decisions (such as approval for coverage, premiums, commissions and fees) and policy obligations are the sole responsibility of the underwriting insurer. The information on this site does not modify any insurance policy terms in any way.

See more providers in
Choose from insurers in

What is gap insurance?

Standing for ‘guaranteed asset protection,’ gap insurance pays the difference between what you receive after a total loss payout and the amount you still owe on a loan. When you lease a new car, the amount your insurance provider offers coverage for (provided you are properly insured) is often less than what you might owe. This is because lenders only pay a car’s actual cash value (aka ACV). So that you’re not paying for something you no longer possess (or making payments on two cars after you’ve replaced it), gap insurance is used to further protect your investment.

How does gap insurance work in New York?

You can only purchase New York gap insurance if:

  • If you are the original loan/lease holder
  • The car is less than 2-3 years old
  • You have both comprehensive and collision on the vehicle

It’s not uncommon for new car buyers to assume that having a loan or lease on a vehicle is the only prerequisite to obtaining gap coverage. However, the car must also meet other criteria as well.

Another misconception is that gap coverage is the same as ‘new car replacement.’ This is not true, either. Gap coverage only pays the difference between a car’s depreciated value (or ACV) and your remaining loan amount. Iit will not give you the funds needed for a new purchase. That’s not to say that gap insurance cannot still be useful. By not having as much debt to your name, you will be more likely to be approved for a new loan.

When do you use gap insurance?

Gap insurance in New York only activates if the car is deemed a total loss and undrivable. This means that for minor bumps and scrapes, gap insurance doesn’t come into play. The vehicle must either be stolen or totaled for gap insurance to pay your remaining loan amount.

Consider the following examples.

Example 1:
You financed a $25,000 car one month ago. After a severe storm, you awake to find that a fallen tree has crushed it. Because it is demolished beyond repair, it is deemed a total loss by your insurance provider. Your comprehensive coverage plan provides you with a payout of $20,000, which means you still owe approximately $5,000. By having gap insurance in this scenario, the outstanding $5,000 is also taken care of.

Example 2:
You recently financed the purchase of a $25,000 car. Because you didn’t pay for the vehicle outright, your lender required you to purchase both full coverage and gap coverage. After parking on the side of the street, an oncoming car knocks off a side mirror and scrapes the door up a bit. You contact your insurance company, which informs you that you are covered because you have collision coverage. However, you decide you want more than the repair amount and instead, seek the full $25,000 to start anew. Gap insurance would not kick in in this scenario because the car is still driveable.

Gap insurance vs.other coverages

With so many types of coverage available, gap insurance is similar to other insurance types in that it activates after a covered peril takes place. It is unique, however, in that it requires both comprehensive and collision coverage to be purchased before it can take effect. Gap insurance also does not pay for any repairs. It only kicks in if the car is totaled or stolen.

The table below explains how gap insurance compares to both comprehensive and collision coverage:

Gap insurance Comprehensive Collision
What it covers Financially protects you if your car is deemed a total loss after a covered peril.

DOES NOT pay for repairs or replacement. Only pays for the difference between an ACV and remaining loan amount.

Pays for repairs or replacement if your car is damaged outside of a collision or after an animal, such as a deer.

Incidents such as fires, falling tree limbs or flood waters are all covered under a comprehensive plan.

DOES NOT pay for any discrepancy between an ACV payout and remaining loan amount.

Pays for repairs or replacement after your car is damaged in a moving accident.

Incidents such as hitting another vehicle or running into a tree or fence are covered under collision coverage.

DOES NOT pay for any discrepancy between an ACV payout and remaining loan amount.

Who offers it Many insurance companies offer gap coverage, but they may call it loan/lease coverage instead.

It is also possible to purchase it through an auto dealership.

Comprehensive coverage can be purchased with most insurance providers. Collision coverage can be purchased with most insurance providers.

Where to buy gap insurance in New York?

Gap insurance is not offered through a typical insurance package. It must either be added on to an existing policy or purchased separately. Many gap insurance providers offer it as an add-on, but some don’t. While you’re searching for it, remember that gap insurance companies also call it loan/lease coverage. However, the coverage works the same under either name.

Buying gap insurance is also possible through most dealerships. However, when you do this, it’s often put onto the loan itself, which means you’ll pay interest on it. Unless offered as a standalone option, meaning you just pay for it upfront, purchasing gap insurance through a dealership may not always be your best option.

Gap insurance companies in New York

If you’re wondering about where to buy gap insurance in New York, there are plenty of options. Some of the most popular providers include:

  • Allstate — Allstate is the fourth largest insurer in the U.S. Including gap coverage, Allstate has add-on coverage options as well as 10 discounts most drivers can take advantage of either now or in the future.
  • Liberty Mutual — If you have several coverage needs, Liberty Mutual has many options. It also has a healthy amount of discounts, too.
  • Nationwide — Nationwide is often one of the cheapest providers for many drivers and tends to score well with J.D. Power for customer satisfaction. If you’re already with Nationwide, consider speaking with an agent about adding gap insurance to your policy. It’s possible adding the coverage won’t increase your premium by too much.
  • Progressive — Progressive sells just about any type of insurance you could possibly need, including gap coverage. Like many insurance providers, it calls it loan/lease coverage instead of gap coverage.
  • Travelers — Travelers may be one of the more expensive options on this list, but it is still a popular provider. It generally fares well in annual customer satisfaction reports from third-party companies like J.D. Power.

Frequently asked questions

How much is gap insurance?

There isn’t a set cost for gap insurance because many things affect the cost of gap insurance. The main factor, of course, is your loan amount compared to the car’s ACV.

Learn more: How much does car insurance cost?

Is gap insurance required in New York?

New York state law doesn’t require you to purchase gap insurance. However, if you finance or lease your new car, your lender or dealership will likely require you to get it.

How do you cancel gap insurance?

You can likely cancel your gap insurance online, but if not, you can always call and speak with an agent. If you prepaid, you can usually expect a refund back into your bank account after the cancellation has been processed.