Many car buyers are surprised to learn that their standard auto insurance policy may not fully protect them in the event of a total loss, especially if their car is financed or leased. This is where gap insurance becomes relevant. When searching for additional auto protection, a common question that arises is: does Progressive offer gap insurance? Understanding what gap insurance is, how it works, and whether it is available through Progressive can help consumers make informed decisions regarding their vehicle coverage.
What Is Gap Insurance?
Gap insurance, or Guaranteed Asset Protection, is an optional coverage designed to pay the difference between the amount a driver owes on their car loan or lease and the car’s actual cash value (ACV) in the event it is declared a total loss due to theft or accident. Standard insurance policies only reimburse the ACV, which depreciates over time. This means car owners might still owe thousands of dollars to their lender even after receiving a claim payout from their insurer.
How Gap Insurance Works
Suppose someone buys a new car for $30,000 and finances the entire amount. Within a year, due to depreciation, the vehicle may only be worth $24,000. If the car is totaled, the insurance company would pay $24,000, but the owner might still owe $28,000 on the loan. Gap insurance would cover the $4,000 shortfall, saving the car owner from out-of-pocket costs.
Does Progressive Offer Gap Insurance?
Yes, Progressive does offer a form of gap insurance, but under a different name. It is called Loan/Lease Payoff Coverage. Although it functions similarly to traditional gap insurance, there are some differences worth noting. This add-on is available to customers who carry comprehensive and collision coverage on their policy.
Loan/Lease Payoff Coverage Details
- Available for both financed and leased vehicles
- Covers the difference between the car’s value and the remaining loan/lease balance
- Only applicable when the car is declared a total loss
- Has a cap typically 25% of the vehicle’s actual cash value
This coverage is optional and must be added to the policy when purchasing or renewing an insurance plan with Progressive. The cap means that if the remaining loan amount exceeds 25% of the ACV, the policyholder may still have to pay a portion of the difference.
Who Should Consider Gap Insurance?
Gap insurance is not necessary for everyone, but there are specific situations where it can be extremely beneficial. Progressive’s Loan/Lease Payoff Coverage is ideal for people who:
- Made a small down payment on their vehicle
- Have a long-term loan (over 60 months)
- Lease their vehicle instead of buying
- Drive a car that depreciates quickly
- Rolled over negative equity from a previous loan
Without gap coverage, these individuals might be left with substantial debt after an accident, making the extra cost of this add-on worthwhile for financial protection.
How to Add Loan/Lease Payoff Coverage to a Progressive Policy
Adding this coverage to a Progressive policy is a simple process. During the online quote process or when speaking to an agent, customers can opt to include Loan/Lease Payoff Coverage. It is important to confirm that the policy already includes comprehensive and collision coverage, as those are prerequisites.
The cost of this add-on varies depending on several factors, such as the type of car, location, driving history, and the loan/lease amount. On average, gap coverage from insurers like Progressive may cost between $5 and $20 per month.
Comparing Gap Insurance Through Progressive vs. Other Options
While Progressive offers a reliable option for gap coverage, it’s not the only way to get protected. Buyers should also consider alternatives:
Dealership Gap Insurance
Many dealerships offer gap insurance at the time of purchase, often rolling the premium into the auto loan. While convenient, this option can be more expensive than adding coverage through an insurer.
Third-Party Gap Insurance
Independent providers offer standalone gap insurance policies. These may be suitable for drivers who didn’t include gap coverage initially or whose current insurer doesn’t offer it. However, pricing and terms can vary widely.
Credit Union or Lender Coverage
Some banks and credit unions offer their own version of gap insurance when financing the vehicle. These often come with different benefits or pricing structures that should be compared to Progressive’s option.
Benefits of Choosing Progressive for Gap Coverage
Opting for Loan/Lease Payoff Coverage through Progressive provides convenience, especially for existing policyholders. Benefits include:
- Easy to bundle with current auto insurance
- Streamlined claim process
- No need for a separate provider or policy
- Nationwide availability (with some exceptions)
Policyholders can manage everything from one dashboard and interact with a single insurer, which can be beneficial during the claims process.
Limitations of Progressive’s Gap Insurance
While Progressive’s Loan/Lease Payoff Coverage is a strong offering, it is important to be aware of the limitations:
- Coverage is capped at 25% of the vehicle’s ACV
- It does not cover late payments or financial penalties on the loan
- Only available if comprehensive and collision are included
These limitations mean that drivers with very large loan balances might still face out-of-pocket costs even with this coverage in place.
Should You Get Gap Insurance from Progressive?
For drivers who are financing or leasing a car, especially with little to no down payment, adding Progressive’s Loan/Lease Payoff Coverage is a smart financial decision. It helps protect against the unexpected cost of paying off a loan on a totaled car. While it’s not suitable for every situation, it offers peace of mind and financial protection for those who may owe more than their car is worth.
Comparing the coverage, pricing, and limitations with other sources is essential before making a final decision. But for many, Progressive’s convenient and cost-effective option provides a solid layer of protection against depreciation and total loss scenarios.