Gap Insurance in Illinois (2025)
While Illinois law doesn’t require gap insurance, it’s worth considering if you financed or leased your vehicle.
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Gap insurance — short for “guaranteed asset protection” — is an optional form of insurance designed for drivers who lease or finance a vehicle. For example, if your financed car is a total loss after an accident, gap insurance helps ensure you aren’t still on the hook for auto loan payments once your car is unusable.
Several car insurance companies in Illinois offer gap insurance at competitive rates. Read on to learn more about what gap insurance covers, which drivers should buy it, how to buy it, and the best companies for gap insurance in Illinois. And remember to always compare car insurance quotes from multiple companies before buying a policy.
Quick Facts
A full-coverage policy in Illinois costs an average of $152 per month. Adding gap insurance typically costs $2 more per month.
Auto-Owners, Progressive, and Erie offer some of the best gap insurance in Illinois.
Leasing companies usually require drivers to carry gap insurance.
How gap insurance works
It’s just reality: A car loses value the moment you drive it off the lot.
So, if you finance your vehicle and only made a small down payment at the time of purchase, you can potentially owe more on the car than its actual cash value (ACV). You’re still paying off a loan worth that original purchase price, even as your vehicle has lost value. In this case, you’re “underwater” on your car loan.
Things can get complicated if you get in an accident that badly damages your vehicle. If your car is totaled, standard car insurance policies will cover the car’s market value, which has depreciated since you bought it — but you’ll still owe loan payments on the full price of the car.
That’s where gap insurance comes in. Gap insurance covers the difference between your car’s market value and the remaining loan in the event of a total loss. This coverage ensures you aren’t still paying car payments if you damage your car beyond repair.
Gap insurance is a good idea if you made a low down payment on your car (typically less than 20%) or if your loan term is more than 60 months. Also, anyone who leases a vehicle should consider gap insurance (and lenders sometimes require you to carry gap insurance if you lease a car).1
What gap insurance covers in Illinois
Gap insurance covers the difference between the amount you owe on your car loan and the market value of your vehicle.
For example, say you purchase a car for $30,000. You pay a down payment of $5,000 and owe $25,000 on your car loan. Unfortunately, a few months into your loan, you total your vehicle. At the time of the accident, your car was worth $23,000 — but you still owe $25,000 on your loan, which means you still have to pay $2,000 for a car that’s unusable.
Gap insurance helps you pay this $2,000. Gap insurance differs from other forms of insurance in that it doesn’t have a deductible. So, the insurer will pay out the full claim amount. You shouldn’t have to pay a portion of your remaining loan balance out of pocket.
You don’t want to be on the hook for additional loan payments after a car is totaled. Gap insurance helps you avoid that scenario.
Important Information
Gap insurance only applies to your remaining loan balance. Your gap insurance policy won’t cover the cost of replacing your totaled vehicle with a new one. New-car replacement coverage, which is also optional, provides coverage for the purchase of a new vehicle of the same year, make, and model after your original vehicle is totaled.
Gap insurance also doesn’t cover overdue loan payment fees, lease penalties, or the down payment for a new vehicle after your car is totaled.
Best gap insurance companies in Illinois
Several insurance companies in Illinois offer gap coverage. The following companies offer the best combination of low rates and high customer satisfaction scores.
Auto-Owners
Progressive
Erie
Data scientists at Insurify analyzed more than 40 million real-time auto insurance rates from our partner providers across the United States to compile the car insurance quotes, statistics, and data visualizations displayed on this page. The car insurance data includes coverage analysis and details on drivers’ vehicles, driving records, and demographic information.
Quotes for Allstate, Farmers, GEICO, State Farm, and USAA are estimates based on Quadrant Information Services’ database of auto insurance rates. With these insights, Insurify is able to offer drivers insight into how companies price their car insurance premiums. The data included on this page represent averages across driver ages, genders, credit scores, and driver profiles for Illinois drivers.
Gap insurance vs. full coverage
In Illinois, full coverage refers to an auto insurance policy that includes liability coverage, collision coverage, and comprehensive coverage. Together, it covers repairs to both the other driver’s vehicle and your vehicle in the event of a car accident.
If you purchase full-coverage car insurance, you shouldn’t assume it includes gap insurance. In most cases, you’ll want to purchase gap insurance as a separate add-on coverage. Gap insurance can enhance your full-coverage policy by covering your remaining loan balance if your car is a total loss.
Who needs gap insurance in Illinois?
Drivers in Illinois must carry liability car insurance, including $25,000 in bodily injury liability per person, $50,000 in bodily injury liability per accident, and $20,000 in property damage liability insurance. But Illinois has no laws requiring drivers to carry gap insurance.2
That means gap insurance is an optional coverage that should be considered on a case-by-case basis. Below are a few cases that might call for gap insurance:
The Illinois Insurance Association recommends gap insurance for drivers who finance a new car with a long repayment period.3
Drivers who purchase cars that tend to depreciate quickly — such as a brand-new luxury car — should purchase gap insurance.
Drivers who are carrying over negative equity from a previous loan to the loan on their current car should purchase gap insurance.
Gap insurance adds to your monthly car insurance payments, so you should consider it carefully before purchasing. For instance, if you made a sizable down payment and have a short repayment term, you probably don’t need gap insurance. In that case, your car’s actual cash value might still exceed your loan balance, so you’re unlikely to be underwater on your loan.
Additionally, if you own your car outright, you have no need for gap insurance. You won’t have a remaining loan balance after a total loss, so you won’t need insurance to cover the difference.
Talk to your car insurance agent to see if you’re a good candidate for gap insurance. Occasionally, your lender will suggest or even require gap insurance before approval of your loan.
How to buy gap insurance in Illinois
You have a few different ways to buy gap insurance. Your car dealership may offer gap insurance to you after you purchase the car, which will be included in the car’s price. You can also purchase it from your auto lender, who will include it in your car loan.
You can also purchase gap insurance as you would any other optional insurance add-on — by speaking to your insurance agent and adding the coverage to your existing auto policy.
Gap insurance in Illinois FAQs
Below, you’ll find answers to some commonly asked questions about gap insurance in Illinois.
Does Illinois require gap insurance?
No. Illinois doesn’t require gap insurance. Illinois drivers only need to carry liability insurance at the 25/50/20 state minimums.
How does gap insurance work in Illinois?
Gap insurance in Illinois works the same as in any other state. If you total your car or someone steals it, your insurance company will pay the difference between any remaining loan balance and the claim payout. Without gap insurance, you’d be on the hook to cover the remaining loan balance out of pocket.
How much is gap insurance in Illinois?
Gap insurance usually costs about $20 per year, though this varies by company. Contact your local auto insurance agent to figure out the costs of gap insurance. Be sure to ask your agent if your insurer has any payout caps or other limitations you should know about.
What are the pros and cons of gap insurance?
Gap insurance offers guaranteed financial protection to drivers who are financing their vehicles and ensures you won’t be on the hook for the remaining balance on your loan after a total loss. Still, gap insurance adds another monthly expense to your insurance costs — so make sure it’s worth the money before purchasing.
Is gap insurance worth it?
Consider your specific situation before deciding if gap insurance is worth it. If you made a small down payment — for instance, less than 20% of your total loan — and have a loan repayment period, gap insurance is likely worth it. If you’ve paid off most of your loan, it’s unlikely you’ll be severely underwater on your loan, so gap insurance might not be worth it.
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