GAP Insurance

GAP Insurance in Texas

Serving Austin, San Antonio, Houston and surrounding areas

What Is GAP Insurance, and Do You Need It in Central Texas?

If you’ve just purchased a new car and financed it with a loan, you might think your standard auto insurance policy has you fully covered. But what if your car is totaled or stolen while you still owe more than it’s worth? This is where GAP insurance comes in.

GAP (Guaranteed Asset Protection) insurance is an essential coverage option for anyone financing a new vehicle. It covers the difference between what you owe on your auto loan and what your car is worth if it’s declared a total loss. Without it, you could be stuck paying thousands of dollars out of pocket.

Why Do You Need GAP Insurance?

Many drivers in Central Texas finance their vehicles, and with today’s rising car prices, the risk of owing more than your car’s actual cash value is higher than ever. Here’s why GAP insurance is a smart choice:

1. New Cars Depreciate Quickly – The moment you drive off the lot, your car’s value drops—sometimes by as much as 20% in the first year. If your car is totaled early on, you might owe significantly more than what your insurer will pay.
2. Loan Amounts Often Exceed Car Values – If you made a small down payment or rolled over debt from a previous car loan, your loan balance may be higher than the car’s market value for several years.
3. Standard Auto Insurance Pays Actual Cash Value (ACV) – Your standard auto policy will only cover the car’s current value, not the full amount you owe on your loan. That means you could be left paying for a car you no longer have.

How Does GAP Insurance Work?

Let’s break it down with a real-world example:

• You finance a brand-new SUV for $40,000.
• After a year, its value drops to $32,000.
• You still owe $37,000 on your loan.
• A storm in Central Texas totals your vehicle.
• Your insurance company pays the $32,000 actual cash value, but you still owe the lender $5,000.
• Without GAP insurance, you must cover this amount out of pocket. With GAP insurance, the $5,000 difference is covered, so you don’t have to worry about it.

Who Should Consider GAP Insurance?

While GAP insurance isn’t required by Texas law, it’s highly recommended for:

• Drivers financing new or nearly new cars
• Anyone making a small down payment (less than 20%)
• Those with long-term loans (60+ months)
• People rolling negative equity from an old loan into a new one

If any of these apply to you, GAP insurance could save you thousands of dollars in the event of a total loss.

Where Can You Get GAP Insurance?

Many car dealerships offer GAP insurance, but their rates tend to be higher than those from independent insurance providers. At Dowd Insurance Agency, we help Central Texas drivers find affordable GAP coverage through trusted carriers, ensuring you get the best protection at the best price.

Protect Your Finances with the Right Coverage

Unexpected accidents happen, but with GAP insurance, you won’t be left paying for a car you can no longer drive. If you’re financing a new vehicle, let Dowd Insurance Agency help you find the coverage you need.

Call us today or request a free quote online!