Michigan gap insurance: Everything you need to know

How much is gap insurance in Michigan?

In Michigan, gap insurance costs an average of $4,082 per year, but prices vary by company. Your car's value also affects the cost of gap insurance. Expensive or luxury cars depreciate faster than standard vehicles, so gap coverage may have to pay more, leading to higher rates.

Cheapest gap insurance companies in Michigan

The cheapest company for gap insurance in Michigan is Auto-Owners, with an average annual cost of $3,168. Not all car insurance companies offer gap coverage, and rates vary significantly by company.

Check out the table below to find the cheapest Michigan insurance companies for gap coverage.

Company	Auto insurance rates with gap premium	Gap premium
Auto-Owners	$3,168	$103
Progressive	$3,314	$51
Allstate	$5,764	$293

Data updated in 2024

Read our methodology

Average gap insurance cost in Michigan by city

Gap insurance costs the most in Detroit, with an average rate of $5,007, while Newberry has the lowest rate at $2,364. Where you live in Michigan can impact your insurance costs. Cities with higher crime and theft rates have higher auto insurance rates since the risk of damage or theft is higher.

Here are the average gap insurance rates by city in Michigan

City	Auto insurance rates with gap premium	Gap premium
Newberry	$2,364	$81
Adrian	$2,425	$82
Michigan Center	$2,569	$91
Mason	$2,592	$93
Ann Arbor	$2,601	$95
Burton	$2,639	$90
East Grand Rapids	$2,664	$92
Grand Rapids	$2,674	$92
Novi	$2,784	$96
Huntington Woods	$2,936	$102

Data updated in 2024

Read our methodology

How much is gap insurance in Michigan by age group?

Car insurance rates for younger drivers are more expensive because they are more likely to engage in risky driving and lack the experience needed to avoid accidents. Rates go down as the driver gets older. For example, at 18 years old the average rate is $12,155 a year, and at 25 the average annual rate is $4,347.

The table below shows the average gap insurance rates in Michigan by age.

Age group	Auto insurance rates with gap premium	Gap premium
Teen	$12,155	$390
Young adult	$4,347	$155
Adult	$4,082	$149
Senior	$3,533	$120

Data updated in 2024

Read our methodology

How does gap insurance work in Michigan?

When you buy or lease a new car, depreciationDepreciation is the decrease in your car's value over time due to wear and tear, age and mileage. Depreciation is used to determine the actual cash value of a vehicle in the event of a total loss. can quickly cause you to owe more than the car is worth. If your car is totaled, the insurance company will only pay out the car's actual cash value, which may leave you owing on the loan. That's where gap insurance comes in. If your vehicle is totaled or stolen, gap insurance covers the difference between your car's value and the loan payoff.

"Gap is designed for people that take long-term loans and/or roll taxes, service plans, or warranties into their loan," said Zack Pope, agency manager at David Pope Insurance in Missouri. "Most gap coverages only go a certain percent over market value to pay off a loan for a totaled vehicle (typically 25%). It costs significantly less money to get gap through your insurance than to purchase it from the dealership."

For example, let's say you have a $40,000 car loan, but your vehicle's actual cash value is only $35,000. If the car is stolen, your insurance company will reimburse you $35,000, minus your deductibleThe deductible is the amount you pay out of pocket for a covered loss when you file a claim.. Gap insurance would cover the remaining $5,000 that you still owe on your loan. Without gap insurance, you'd be responsible for paying this difference out of pocket.

You can drop gap coverage once your loan balance is below your car's value. While you can cancel gap insurance anytime, you may not be able to add it later. Most insurers require you to add gap coverage soon after buying a car.

Where to buy gap insurance in Michigan

Many insurance companies, including major carriers, offer gap insurance in Michigan. It's relatively easy to add coverage to your current auto insurance policy.

Adding gap coverage to your auto insurance policy is usually the most cost-effective option. While you can purchase gap coverage from most car dealers and lenders, those policies tend to be more expensive, making it a less attractive option.

Methodology

Insurance.com commissioned gap insurance rates from Quadrant Data Services in late 2023 at a variety of ages in all 50 states and Washington, D.C. Base rates use a 40-year-old driver with a 2023 Honda Accord LX. Rates were gathered from 138 insurance companies in 1,468 ZIP codes.

Michigan gap insurance: FAQs

Is gap insurance required in Michigan?

Gap insurance isn't required by law in Michigan, but your lender may require you to have the coverage.

Who should buy gap insurance in Michigan?

If you have a car loan or lease in Michigan, you might need gap insurance. If you made a small down payment, you could quickly owe more than your car is worth since vehicles lose value faster than you can pay the loan. In this case, gap insurance can be a smart choice.

You don't need gap insurance if you own your car or made a large down payment to ensure that you owe less than the car's value at the start of your loan.

What is standalone gap insurance in Michigan?

Standalone gap insurance is a separate policy, not a part of your car insurance. You can buy gap insurance from your lender or a private company as an independent policy.

Does gap insurance cover leased cars in Michigan?

Michigan gap insurance covers leased cars where the driver owes more than the vehicle's current market value. Over time, you may remove gap coverage once your vehicle is worth more than what is owed.