How Much Is GAP Insurance Per Month?

Last Updated: September 11, 2025

Overview: Understanding the Monthly Cost of GAP Insurance

For any vehicle owner or lessee, understanding the monthly cost of GAP insurance is essential for weighing peace of mind against your budget. Guaranteed Asset Protection (GAP) insurance can be a crucial safeguard, covering the difference between your vehicle’s Actual Cash Value (ACV) and your outstanding loan balance if your car is declared a total loss.

However, the price for this protection can vary significantly, whether it’s purchased through an insurer, a dealership, or a membership organization. Prices can range from just a few dollars a month to hundreds of dollars in total. Let’s break down the various cost structures and help you estimate “How much is GAP insurance per month?”

Several factors influence the cost of GAP insurance, including:

• Where you purchase it: Insurers typically offer lower rates than dealerships.
• Your vehicle’s value and loan amount: Higher loan amounts or more expensive vehicles can sometimes lead to slightly higher GAP premiums.
• The policy term: Longer terms might have different pricing structures.
• Your state’s regulations: Some states have rules that affect pricing or refund policies.
• Your existing insurance provider: Bundling GAP with your auto insurance can often lead to discounts.

By exploring typical cost estimates from various sources, we can give you a clearer picture of what to expect.

1. Monthly Cost Estimates from Insurers

When purchased as an add-on to your existing auto insurance policy, GAP coverage is often the most cost-effective option. The monthly premium is typically modest, making it an affordable enhancement to your financial protection.

• Typical Average: Industry estimates, as noted by sources like Car and Driver and Capital One, place the average monthly cost for GAP insurance through an insurer at around $7 per month. This represents a relatively small increase compared to your standard auto insurance premium.
• By Provider: Specific insurer rates can vary:
  • Progressive: Often quoted around ~$4/month.
  • State Farm: Similarly, estimates hover around ~$4/month for comparable coverage (though State Farm offers an alternative, as we’ll discuss).
  • AAA, Nationwide: These providers often fall in the range of ~$6–7/month.
  • Auto-Owners: Typically competitive, with costs around ~$5/month.
  • Erie: Sometimes noted on the higher end for insurer-provided GAP, potentially reaching around ~$20/month, according to some analyses from Insure.com. This highlights the importance of getting quotes from multiple providers.
• LA Insurance Estimate: This source suggests a general range from $2 to $20/month, with top-tier insurers averaging closer to $7.50/month for GAP coverage.

These figures clearly indicate that adding GAP insurance to your existing auto policy is generally the most budget-friendly way to secure this vital protection.

2. Annual Cost Equivalents & Variations (When Bundled with Insurers)

Looking at the annual cost can sometimes make the monthly figures even clearer, especially when GAP insurance is bundled with your primary auto policy.

• Low End (Bundled): When purchased through an insurer, GAP coverage can often be as low as $20–$40 per year. This translates to a monthly equivalent of roughly $1.70–$3.30 per month, making it exceptionally affordable for many drivers.
• Capital One / Industry Estimate: Many industry sources, including Capital One, indicate that GAP insurance, when added to an auto policy, might cost around $20 per year total, or approximately $1.70 per month. This is often calculated as a small percentage (around 5–6%) of your collision and comprehensive premium.
• WalletHub Estimates: WalletHub provides a useful comparison:
  • If purchased from a **dealership or lender**, the total cost could range from $400–$700 (or even more), typically broken into monthly loan payments (which we’ll explore next).
  • If purchased **through your insurer**, the cost is significantly lower, estimated at $20–$40 per year, reinforcing the monthly equivalent of ~$1.70–$3.30/month.

The annual perspective truly highlights the substantial cost difference between buying GAP insurance from your existing auto insurer versus other channels.

3. Dealership & Lender Options (One-Time Fees & Financed Costs)

While often convenient, purchasing GAP insurance directly from a dealership or lender typically comes with a much higher price tag. This cost is usually presented as a one-time fee, which is then often rolled into your overall car loan.

• Upfront Costs: Dealerships or lenders commonly charge between $400 to $700 (and sometimes up to $1000 or more) for GAP insurance. When this amount is rolled into your car loan, it means you’re not just paying the fee, but also **interest on that fee** over the life of your loan, significantly increasing the long-term expense.
• Monthly Equivalent Examples (when financed): To illustrate the monthly impact of a dealership-purchased GAP policy, consider these examples:
  • A $400 GAP fee financed over 72 months translates to approximately $5.55/month added to your car payment.
  • A $900 GAP fee financed over 60 months equates to around $15/month.
  • A $750 GAP fee financed over 66 months would add approximately $11.36/month.

Even these monthly equivalents, which don’t fully account for the added interest over time, clearly pale in comparison to the significantly lower bundled pricing offered by most auto insurers. This is a critical factor for budget-conscious buyers.

4. AAA GAP Insurance Cost Structure

AAA, known for its diverse membership benefits, also offers GAP insurance, but with a unique cost structure that can vary by region and membership type.

• Flat Fee Option: In many areas, AAA typically charges a flat fee for GAP insurance, which is paid once at the time of loan origination. This fee is often around $299. This upfront payment avoids the additional interest costs of financing through a dealership.
• Member-Based Option: For some members, GAP may be offered as an add-on that’s calculated as approximately 5% of your annual car insurance premium. While no fixed dollar amount is given for this option, based on typical premium costs, this would generally translate to roughly $5–$15 per month.
• Regional Variation: It’s important to note that AAA’s pricing can be region-specific. For instance, some sources indicate that in 23 states plus Washington D.C., AAA charges a flat fee of $399, with Colorado being an exception at $299. Always check with your local AAA branch for the most accurate pricing in your area.

5. State Farm: Not “GAP,” But a Similar Alternative (Payoff Protector)

State Farm has a unique approach to addressing the “gap” issue: they do not offer traditional, standalone GAP insurance. Instead, they provide a similar benefit known as Payoff Protector.

• Built-in Benefit: Payoff Protector is a feature exclusively available for auto loans originated through State Farm Bank. It acts as a built-in benefit that helps cover the difference between your loan balance and your car’s ACV in the event of a total loss. This means it’s not a policy you buy separately, but rather a protection tied to your State Farm Bank loan.
• Cost Glitch Alert: While researching GAP insurance costs, you might encounter some older or erroneous sources that list an annual average of $1,869 for “State Farm GAP”. It’s crucial to understand that this figure is highly likely to be incorrect or outdated. Such an amount far exceeds typical market pricing for any form of GAP coverage and does not reflect State Farm’s current Payoff Protector offering.
• Insider Insight (Reddit): As shared by users on Reddit and confirmed by various insurance analyses, “State Farm has never offered GAP insurance as a standalone option… only Payoff Protector through State Farm Bank.” This distinction is vital for State Farm customers to understand when considering their coverage options.

If you have a State Farm Bank auto loan, you likely already have a form of “gap” protection. If your loan is with another lender, you would need to seek GAP insurance from a different provider, likely your primary auto insurer.

Summary Table: Monthly GAP Insurance Cost Comparison

Final Thoughts: Making the Smart Choice for Your GAP Insurance

Navigating the various costs of GAP insurance can seem complex, but understanding the options empowers you to make a financially savvy decision:

• Cheapest Option: Generally, adding GAP insurance via your existing auto insurer is the most economical choice. You can typically expect to pay under $10 per month, often just a few dollars, for this valuable protection.
• Convenience vs. Cost: While purchasing GAP insurance through a dealership or lender might seem convenient (as it’s bundled into your loan paperwork), you’ll almost always pay significantly more. This higher cost is amplified by the fact that you’re paying interest on the GAP fee over the entire loan term.
• State Farm Users: If you have an auto loan through State Farm Bank, remember you likely receive a built-in benefit called Payoff Protector. This serves a similar function to GAP insurance, but it’s crucial for buyers to understand its specific limitations and how it differs from a standalone policy.
• AAA Members: Evaluate whether AAA’s flat fee option (typically $299–$399 upfront) or their premium-based option best fits your financial situation and preference for payment structure.

By comparing quotes from multiple sources—especially your current auto insurer—you can find the most affordable and appropriate GAP insurance coverage to protect your investment.

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Disclaimer: This article is for informational purposes only and does not constitute financial or insurance advice. Coverage details, state laws, and policy requirements vary. We encourage you to consult with our qualified, licensed insurance professionals to review your specific needs and circumstances.

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