Gap Insurance in North Carolina (2025)
Gap insurance protects you if you total your car and owe more on the loan balance than what it’s worth.
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Gap insurance is additional auto insurance that can cover the difference between the actual cash value of your car and the amount left on an auto loan for your totaled vehicle. If you have an auto loan or lease, you can benefit from purchasing gap insurance. Without this coverage, you’d have to pay out of pocket for a car you can’t drive anymore.
The national average for full-coverage insurance is $182 per month, according to Insurify data. A gap policy typically adds about $2 per month to your car insurance costs.
Here’s what you need to know about comparing car insurance quotes and purchasing gap insurance in the Tar Heel State.
Quick Facts
The state of North Carolina doesn’t require gap insurance coverage, but your lender might.
Gap insurance isn’t the same as new car replacement insurance.
Liberty Mutual, Allstate, and Nationwide offer some of the cheapest gap insurance coverage in North Carolina.
How gap insurance works
Gap, or guaranteed asset protection, insurance is a product you can buy from an insurance company or car dealership that covers the difference between your vehicle’s value and the remainder of your loan if you have an auto accident that totals your vehicle.1
If you total your car, your insurance company should reimburse you for the amount your vehicle is worth if you file a collision or comprehensive coverage claim. But if you’re financing your vehicle, the amount your car is worth will likely differ from the remainder of your loan if you have an auto accident resulting in total loss for your vehicle.
Good to Know
Depreciation hits a car as soon as you drive it off the lot, which is why gap insurance is important if you don’t want to owe an additional sum if something happens that’s out of your control.
What gap insurance covers in North Carolina
North Carolina gap insurance covers the difference between your vehicle’s actual cash value (ACV) — based on its current market price — and the amount you still owe on your car loan if you total your car or someone steals it. Gap insurance doesn’t cover medical bills incurred as a result of an accident or the replacement of another party’s vehicle.
Let’s say your current vehicle is worth $12,000 and you still owe your auto lender $15,000. If an accident totals your vehicle and you have collision insurance, your insurer will reimburse you $12,000. Gap insurance will kick in and pay the remaining $3,000 of the loan amount to cover both you and your auto lender.
A common misconception about gap insurance is that it’s too expensive or sold only through your lender. Gap insurance is affordable, and you can purchase it through your auto insurance company or a third-party company.
Best gap insurance companies in North Carolina
Not all insurance companies sell gap insurance, so make sure you look into coverage options when comparing multiple quotes. The three companies below have some of the cheapest car insurance rates in North Carolina, and they also offer gap coverage.
Liberty Mutual
Allstate
Nationwide
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 North Carolina drivers.
Gap insurance vs. full coverage
Full-coverage insurance is a type of insurance that includes the state’s minimum-required liability coverage plus comprehensive and collision coverages.
Comprehensive insurance can help pay for damages caused by severe weather, such as hail or lighting, and non-collision events, like fire, vandalism, or theft. Collision insurance covers the cost of repairs if you’re in an accident with someone else. These coverages don’t pay for any amount of money you still owe a lender after the initial insurance payout.
Gap insurance covers the remaining amount you still owe. Even if you have full coverage, you should buy gap insurance if you have a loan or lease on your car. Some lenders or financial institutions may even require it, depending on the terms and conditions of the auto loan.
Who needs gap insurance in North Carolina?
The state of North Carolina doesn’t require gap insurance, but a car lender likely will require you to maintain the coverage during your loan period.2
You should purchase gap insurance if any of the following apply:
You made a down payment of less than 20%.
You financed your vehicle for 60 months or longer.
You have a vehicle lease.
You purchased a vehicle that depreciates quickly.
You rolled negative equity over from an old car loan.
How to buy gap insurance in North Carolina
Most car insurance companies offer gap insurance, which they might also call loan/lease payoff coverage. You might be able to purchase it as a stand-alone policy, but most insurers sell it as an add-on to your existing policy. If your current insurer doesn’t offer this coverage, consider switching to one that does.
Adding gap insurance to a full-coverage policy with collision and comprehensive coverage adds about $20 per year to your premiums, according to the Insurance Information Institute.
You can also buy gap insurance from the lender you’re financing your vehicle through. But getting gap insurance through the lender will end up costing more because the lender will roll it into your loan or lease, and you’ll pay interest on it.
Gap insurance in North Carolina FAQs
The following information can help answer your remaining questions about gap insurance in North Carolina.
How much is gap insurance in North Carolina?
The cost of gap insurance depends on where you purchase it, as well as individual factors like your age, your location, and the type of car you drive. But adding gap insurance to an existing full-coverage policy only adds about $20 per year to your premium, according to the Insurance Information Institute.
Does North Carolina require gap insurance?
No. The state of North Carolina doesn’t require gap insurance. North Carolina drivers only need to purchase the minimum liability limits set by the state, which include bodily injury and property damage liability.3 But your lender may require gap insurance, in addition to other auto insurance policies, when you finance or lease your vehicle.
What does gap insurance cover in North Carolina?
Gap insurance in North Carolina covers the gap between your vehicle’s actual cash value and the remainder you still owe on an auto loan if you total your vehicle or someone steals it. Gap insurance doesn’t cover other damages to a vehicle that may leave it unusable, such as an engine repair or other needed service.
Is gap insurance worth it?
Though not required, gap insurance can help provide peace of mind when you purchase a new vehicle. The cost of gap insurance makes sense if your car loan exceeds the value of the vehicle, if you have a minimal down payment, or if you plan on using your vehicle a lot, which results in high mileage.
Does gap insurance cover negative equity?
Yes. Gap insurance covers negative equity, also known as the money still owed when a car’s actual cash value is less than the remaining balance on the vehicle’s loan or lease.
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