How State Farm GAP Insurance Works

State Farm does not offer GAP insurance, but they do offer an alternative. State Farm’s Payoff Protector is like GAP insurance in that it covers the financial cost of a car loan after a car has been totaled or stolen.

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Tonya Sisler has a Bachelor’s Degree from the University of South Carolina in Journalism and has worked for 15+ years in management. She has also completed a proofreading certification and is currently a professional writer.

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Brad Larson has been in the insurance industry for more than a dozen years. He started out as a claims adjuster for a national carrier. He has since switched to the agency side of the business. Brad is licensed in all P&C lines.

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Reviewed by Brad Larsen
Licensed Auto Insurance Agent Brad Larsen

UPDATED: Mar 16, 2022

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Things to Know

  • State Farm does not offer GAP insurance but does have an alternative called Payoff Protector
  • State Farm’s Payoff Protector provides financial coverage for a totaled or stolen vehicle’s loan principal amount
  • State Farm Bank must have created your vehicle loan to qualify for State Farm’s Payoff Protector program

Knowing which car insurance companies offer GAP insurance can be difficult, but State Farm makes keeping your vehicle protected easy. Unlike other companies, State Farm has an easy alternative to GAP insurance that can save you a lot of money with little hassle.

Offering invaluable benefits for your stolen or totaled vehicle, State Farm has all the coverage you need to protect your car and wallet from lengthy car loans and lease agreements.

While State Farm does not offer GAP insurance, their alternative Payoff Protector coverage can help pay off large sums of money on a vehicle too damaged to drive.

Choosing the right car insurance company can be difficult, but we are here to help. Use your ZIP code in our free car insurance comparison tool to find the best car insurance estimates for you.

Payoff Protector by State Farm Can Help You Save

State Farm does not offer GAP insurance coverage. However, State Farm’s Payoff Protector is an alternative to GAP insurance that automatically comes with all State Farm Bank auto loans. This coverage helps drivers who get into a car accident and total their vehicle. Additionally, Payoff Protector can help you if your car gets stolen.

GAP insurance will usually cover a portion of your car’s overall value and apply that to any outstanding car loans or lease agreements. However, State Farm’s Payoff Protector is different. Instead of covering a certain percentage of a car’s value, Payoff Protector will cover the principal balance on an auto loan after a vehicle has been totaled or stolen.

The first step to using State Farm’s Payoff Protector after an auto accident is to contact your car insurance provider. When your car insurance company has declared your vehicle a total loss, State Farm will calculate the reimbursements you will receive from your Payoff Protector coverage.

Those with an auto loan from State Farm Bank likely have car insurance coverage from State Farm. However, you do not need to use State Farm as your car insurance company to include Payoff Protector in your car insurance coverage. As long as your auto loan originated from State Farm Bank, you will have Payoff Protector included in your arsenal of coverage regardless of the company providing you car insurance coverage.

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What is GAP insurance?

GAP stands for guaranteed auto protection. This additional car insurance coverage option protects you against your car’s depreciating value and assists in paying off the vehicle in some situations.

GAP insurance is coverage that helps you pay off your car loan or lease after your car has been stolen or totaled. GAP insurance is often confused with new car replacement coverage, but these two coverages are very different. New car replacement coverage enables your car insurance company to assist you with purchasing a new car. GAP insurance helps you take care of an outstanding car loan or lease agreement on a totaled or stolen vehicle.

Many car insurance companies only cover around 25% of a car’s total value toward the loan or lease agreement. For example, a $20,000 car can net you a $5,000 GAP insurance refund, and this refund can apply to your car loan balance or lease agreement.

GAP insurance works for totaled cars and cars that have been stolen, making it a versatile and comforting coverage to keep. GAP insurance also has low monthly costs with many insurance companies.

Who benefits from GAP insurance?

Anyone with a loan or lease agreement on a vehicle benefits from optional GAP insurance coverage for their car.

Those with a State Farm Bank auto loan will not need to purchase optional GAP insurance since Payoff Protector will cover these needs. In the case of a totaled or stolen vehicle, Payoff Protector will likely provide more benefits than other GAP insurance coverage. Since Payoff Protector pays for the outstanding principal balance of an auto loan after a car has been totaled or stolen, you will likely get more coverage from Payoff Protector than GAP insurance.

Instead of getting up to 25% of your car’s overall value, Payoff Protector can offer you much more than GAP insurance and put you in a better financial position to get a new vehicle.

However, drivers who do not have an auto loan with State Farm Bank and have a car loan or lease agreement will benefit from the additional coverage.

Any drivers who have made small down payments on their vehicles and have large loans can get added protection with GAP insurance. Drivers who have long-term car loans or drive frequently will also benefit from considering GAP insurance as it can keep you covered in the case of an accident or theft that leaves your car inoperable.

How much does GAP insurance cost?

Typically, GAP insurance from car insurance companies can cost less than $25 per month. Some providers, like Progressive, offer GAP insurance for as little as $5 per month.

However, GAP insurance premiums depend on a driver’s history of traffic incidents, arrests, or other traffic-related events. Drivers with a good record on the road can expect to see inexpensive pricing for GAP insurance per month. Some insurance companies offer small GAP insurance coverage for only $3 per month. Other companies charge around $25 but offer more benefits and larger payouts for that monthly price.

Drivers who have an auto loan from State Farm Bank will not need to worry about the cost of their coverage since the Payoff Protector program comes included with their auto loan. These drivers will not need to shell out any amount on monthly premiums for GAP insurance.

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Additional Coverage With State Farm Can Add Protection

State Farm offers many options for additional coverage. Not only does State Farm have rental car coverage for a small monthly cost, but they also have roadside assistance, sports car coverage, and coverage for classic antique vehicles. All these coverage options keep your car safe and add protection from damage, theft, or emergencies.

For example, State Farm roadside assistance coverage costs less than $10 for a six-month policy and offers towing services, locksmith services, fuel delivery, and battery jump-starts. Roadside assistance can also help you with a tire change if you have an appropriate spare and can provide one hour of mechanical labor reimbursed to you.

State Farm’s Payoff Protector Can Keep Your Car Covered

State Farm does not offer GAP insurance coverage, but you can keep your vehicle protected against depreciation with State Farm. By using State Farm’s Payoff Protector, you can get similar coverage to GAP insurance and feel safe against having a totaled car with outstanding loan payments or lease agreements.

Finding the right car insurance company to partner with for your car insurance needs can be difficult, but State Farm makes it simple. With their competitive rates, praised customer care, and Payoff Protector program, you can rely on State Farm to meet all your car insurance needs. Not only does Payoff Protector offer coverage for stolen or totaled vehicles, but the program also comes included with every vehicle loan created by State Farm.

Use your ZIP code in our free car insurance comparison tool to view the best estimates from all the car insurance companies on the market.

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