New Jersey gap insurance: Everything you need to know

Gap insurance covers the difference between your car’s value and the amount you still owe if it’s totaled or stolen. It’s not required by law in New Jersey, but many lenders and leasing companies require it. In New Jersey, gap insurance costs an average of $3,306 per year, with Travelers offering the lowest rates.

Last updated: Mar 4, 2026

How much is gap insurance in New Jersey?

In New Jersey, gap insurance costs an average of $3,306 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 New Jersey

Travelers offers the cheapest gap insurance coverage in New Jersey at $2,558 annually. Not all car insurance companies provide gap coverage, and rates differ widely by company.

See the table below to find the cheapest insurance companies for gap coverage in New Jersey.

Company	Auto insurance rates with gap premium	Gap premium
Travelers	$2,558	$36
Farmers	$2,829	$103
Progressive	$3,138	$69
Plymouth Rock Assurance	$4,700	$139

Read our methodology

Average gap insurance cost in New Jersey by city

Gap insurance costs the lowest in Avon-by-the-Sea at $2,783. Where you live in New Jersey 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 New Jersey

City	Auto insurance rates with gap premium	Gap premium
Avon-by-the-Sea	$2,783	$73
Belmar	$2,783	$73
Brielle	$2,811	$72
Manasquan	$2,811	$72
Mantoloking	$2,811	$72
Normandy Beach	$2,811	$72
Point Pleasant	$2,811	$72
Sea Girt	$2,811	$72
Spring Lake Heights	$2,811	$72
Boonton	$2,860	$75
Denville	$2,860	$75
Mount Tabor	$2,860	$75
Mountain Lakes	$2,860	$75

Read our methodology

How much is gap insurance in New Jersey by age group?

Gap insurance coverage for an 18-year-old driver costs $11,009 a year and costs $3,740 annually for a 25-year-old driver. Car insurance costs more for younger drivers because they are more likely to take risks and have less experience avoiding accidents. However, rates decrease as drivers get older.

Here are the gap insurance rates in New Jersey for different age groups.

Age group	Auto insurance rates with gap premium	Gap premium
Teen	$11,009	$290
Young adult	$3,740	$100
Adult	$3,306	$87
Senior	$3,239	$77

Read our methodology

How does gap insurance work in New Jersey?

When you buy or lease a new car, it depreciates quickly resulting in you owing more than it's worth. If your car is totaled, your insurance company will only pay its actual cash value, which might not cover your full loan balance. That's where gap insurance helps. If your car is totaled or stolen, gap insurance covers the difference between your car's value and what you still owe on the loan.

"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 New Jersey

Many insurance companies, including major carriers, offer gap insurance in New Jersey. You can easily add this coverage to your existing auto insurance policy or buy a standalone policy.

Adding gap coverage to your car insurance policy usually costs less. You can also buy gap coverage from most car dealers and lenders, but their policies are often more expensive, making them a less appealing choice.

Methodology

We gathered car insurance rates with and without gap insurance through our data partner, Quadrant Information Services.

Averages are annual and based on our full coverage data set. This data set is based on:

Bodily injury liability of $100,000 per person and $300,000 per incident
Property damage liability of $100,000 per incident
Comprehensive and collision deductibles of $500
40-year-old driver
Honda Accord LX
Good credit
A clean driving record
12-mile commute, 10,000 annual mileage

To show the cost of gap insurance, we have compared rates with gap insurance added to the averages without gap insurance, and the difference is shown as the annual cost of gap insurance.

Rates are based on an analysis of over 5 million data points in all 50 states and Washington, D.C. from 138 companies.

New Jersey gap insurance: FAQs

Is gap insurance required in New Jersey?

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

Who should buy gap insurance in New Jersey?

If you have a car loan or lease in New Jersey, 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 New Jersey?

Standalone gap insurance is a policy of its own, not connected with your car insurance. Gap insurance is available from your lender or a private company as a separate policy.

Does gap insurance cover leased cars in New Jersey?

New Jersey 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.