Gap Insurance in New York (2025)
Gap insurance pays off the balance of a lease or loan if your vehicle is totaled or stolen.
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If someone steals or totals your financed or leased vehicle in New York, you’ll be responsible for paying off any outstanding loan balance. Since cars lose value quickly, your full-coverage insurance payout could be less than what you owe on your vehicle.
Gap insurance can cover any difference between your claim payout and loan balance. But in New York state, it’s up to you to take the initiative to buy it. A full-coverage policy in New York costs $187 per month, on average. Gap coverage typically adds an extra $2 per month to your insurance costs.
State laws don’t require auto loan companies to offer gap insurance when you finance a car. And the state bars lenders from requiring you to buy gap insurance as a condition of getting a loan.1
Here’s what you need to know about buying gap insurance in New York.
How gap insurance works
A vehicle is a depreciating asset. Its actual cash value decreases as you drive it. If its value goes down faster than your loan balance, you may owe more than the car is worth — a situation known as negative equity. This can occur if you took out a loan for more than five years or didn’t put enough money down.
Car insurers base claims payout amounts on what vehicles are worth at the time of an accident. And they’ll pay it to your lien holder, not you.
If someone steals or totals your car, your insurance settlement may not be enough to pay off the full remaining balance on your loan. Gap insurance — also called guaranteed asset protection — repays any loan balance remaining after your auto insurance policy pays.
New York state law requires lenders and leasing companies to tell you in writing if they’ll hold you responsible for your full loan balance in case of a total loss.
What gap insurance covers in New York
Gap insurance covers the difference between the current value of your car and what you owe on your car. It doesn’t cover any medical bills or car repairs following an accident.3
For example: Let’s say you purchase a $30,000 car with a $27,000 loan and drive it for one year before you have an accident that totals your vehicle. You have collision coverage with a $500 deductible.
By the time of your accident, your car has depreciated in value by about 20%, so it’s now worth $24,000. Your collision coverage will pay out $23,500.
You’ve made some payments on your auto loan but still owe $26,000 at the time of your accident. Gap insurance can cover the difference between what your vehicle is worth and your remaining loan balance. In this scenario, your policy would cover the $3,000 gap.
Best gap insurance companies in New York
You have several options to choose from when buying gap insurance in New York. Here’s a list of the best insurance companies in New York that offer the coverage.
Allstate
Progressive
Travelers
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 this data, Insurify is able to offer drivers insight into how companies price their car insurance premiums. The data included on this page represent averages across ages, genders, credit scores, and driver profiles for New York drivers.
Gap insurance vs. full coverage
Full-coverage auto insurance adds collision and comprehensive coverages to basic liability insurance. The coverages can pay to repair physical damage to your vehicle. Full coverage may also include medical payments coverage.
While you can have a full-coverage policy without gap insurance, you’ll never have gap insurance without full coverage. That’s because lenders and leasing companies typically require drivers to buy full-coverage policies to protect their investment.
Here are key differences between gap insurance and full coverage:
Who needs gap insurance in New York?
New York law doesn’t require drivers to purchase gap insurance, but your financial institution or dealership might. Some drivers should consider purchasing gap insurance for more financial protection.
You should consider purchasing gap insurance if you:
Took out a long-term car loan of more than 60 months
Made a small down payment
Rolled negative equity from an old vehicle loan into a new car loan
Have a lease and the auto lender requires it
Have a vehicle known for depreciating quickly
Drivers who made a large down payment or secured a car loan for 60 months or less don’t typically need gap insurance. But drivers who are risk-averse and prefer buying additional coverage can benefit from the confidence and peace of mind gap insurance provides.
Dan Stous, a certified financial planner (CFP), explains that dealerships often try to get you to purchase add-on products that aren’t useful when you’re buying a new car.
“Gap insurance is one of those products that is actually something to consider,” he says. Stous explains gap insurance can also benefit drivers without a lot of personal cash.
How to buy gap insurance in New York
The most affordable way to buy gap protection in New York is to call your insurance agent and add the coverage to your existing car insurance policy. You can purchase a stand-alone policy through a car dealership or a lender, but it’s typically cheaper to buy the coverage as an add-on with your car insurance company.
The cost of gap insurance in New York varies based on your driver profile, vehicle type, and insurer. Adding gap insurance to your policy typically costs between $20 and $40 annually, but it can cost more if you buy it separately through a dealership or lender.
Gap insurance in New York FAQs
If you still have questions about gap insurance in New York, the following information should help you decide whether you should buy this coverage.
How does gap insurance work in New York?
Gap insurance in New York works the same as it does in any other state. You’ll typically buy the coverage when you purchase a car that you’re financing or when you lease a vehicle.
In case of a total loss due to an accident or theft, gap insurance in New York will pay the difference between your insurance settlement amount and your loan or lease balance. Depending on the insurer, the gap payout amount may be limited.
Is gap insurance a good idea?
It depends. If you owe more on your vehicle than its actual cash value, gap insurance is a good idea. New York insurance law doesn’t allow lenders to require you to buy gap insurance. They can (and typically do) require you to buy a full-coverage policy.
Since you’re already paying for full coverage, it makes sense to spend a bit more to protect yourself from a big bill if your vehicle is totaled or stolen.
Does GEICO offer gap insurance in New York?
No. GEICO doesn’t currently offer gap insurance — in New York state or anywhere else. If you have GEICO for your full-coverage car insurance policy, you’ll have to look elsewhere for gap insurance.
Do you need gap insurance for a used car?
More than half of all used car purchases are financed in the U.S. Vehicles depreciate the most — as much as 20% — during the first year. But you may still end up owing more than your used car’s actual cash value.
If you took a long repayment term, put little or no money down, or financed at a high interest rate, it could be a good idea to buy gap insurance for your used car.
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