Summary: Lease gap insurance can help you protect against potential losses after a vehicle is totaled or stolen. Unlike other states, Texas has laws limiting the cost of gap insurance on a lease and the terms in which coverage can be offered. Understanding whether or not gap coverage is right for you is important and comparing quotes can help you find affordable, reliable protection that meets your needs and budget. Estimated Read Time: 2 mins
Lease gap insurance isn’t required in Texas but can be an important add-on that helps you cover the costs after an accident in which the vehicle is stolen or totaled.
To have gap insurance, you’ll need to have collision coverage and comprehensive coverage in place.
It’s important to remember that vehicles depreciate rapidly, which is why gap coverage can be an affordable consideration to help you protect from potential losses following a major accident or grand theft auto.
Is Gap Insurance Included in the Lease?
In many states, lease gap insurance may be included when you get your vehicle, but things work differently in the Lone Star State.
Texas law doesn’t make gap coverage a requirement, prohibits it from being a condition of a loan or lease, and limits the cost of your coverage to 5% of the loan amount.
For leased vehicles, the cost of your coverage can’t exceed 5% of the adjusted capitalized cost as noted by your lease agreement.
Reasons for Gap Insurance Lease Coverage
Getting gap coverage on a lease may not be mandatory but it can still be a great idea.
Here are some scenarios in which you may want to consider adding gap coverage for your lease car:
- You’re leasing a vehicle and don’t want to pay for potential losses after it’s totaled or in the event that it’s stolen.
- The lease is a luxury or high-valued vehicle.
- The terms of your lease are long-term or a payback term.
Loan Lease Payoff vs Gap Insurance
A gap insurance policy is going to pay the full difference between what you owe on a vehicle and its actual cash value (ACV), often including your deductible.
A loan lease payoff will not cover the entire ACV and only provides reimbursement for part of it.
You can purchase gap insurance for a leased car when you’re getting the vehicle but only have a short window to do so. On the other hand, a loan/lease payoff is available at any time.
Find Affordable Lease Gap Insurance in Texas
Who you receive gap coverage from matters. It’s best to get quotes from multiple top-rated carriers to find the right coverage at the lowest price. Contact us today or click the button at the top of the page to get a quote and save.
Sources:
1. Texas Gap Insurance, Paradowski Law. Accessed June 2024. https://www.paradowskilaw.com/blog/2020/june/texas-gap-insurance/