Tennessee gap insurance: Everything you need to know

How much does gap insurance cost in Tennessee?

Gap insurance in Tennessee costs $2,056 per year, on average, but rates vary by company. The value of your vehicle also affects the cost of gap coverage. Expensive or luxury cars usually depreciate faster than standard vehicles, so gap insurance may have to cover more, which increases the cost.

Cheapest gap insurance companies in Tennessee

Travelers offers the cheapest gap insurance coverage in Tennessee at $1,482 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 Tennessee.

Company	Auto insurance rates with gap premium	Gap premium
Travelers	$1,482	$43
Auto-Owners	$1,572	$55
Nationwide	$1,746	$55
Progressive	$2,462	$91
Farmers	$3,018	$134

Read our methodology

Average gap insurance cost in Tennessee by city

Memphis has the highest gap insurance rates at an average of $2,272 a year, while Sevierville offers the lowest at an average of $1,849 per year. Where you live in Tennessee affects your insurance rates. Cities with higher crime and theft have higher insurance costs because your vehicle is at a greater risk of being damaged or stolen.

The table below lists the average gap insurance rates by city in Tennessee.

City	Auto insurance rates with gap premium	Gap premium
Sevierville	$1,849	$70
Watertown	$1,962	$84
Ashland City	$1,985	$80
Knoxville	$1,997	$76
Hermitage	$2,027	$71
Nashville	$2,051	$73
Paris	$2,099	$95
Kingston	$2,123	$86
Dayton	$2,163	$92
Germantown	$2,197	$74

Read our methodology

How much is gap insurance in Tennessee by age group?

Gap insurance rates are higher for younger drivers because they have less experience and are more likely to take risks while driving, increasing the odds of a total loss. As drivers get older, their rates go down. For example, an 18-year-old pays an average of $8,477 per year, while a 25-year-old pays around $2,600 annually.

The table below lists the average gap insurance rates in Tennessee based on age.

Age group	Auto insurance rates with gap premium	Gap premium
Teen	$8,477	$290
Young adult	$2,600	$95
Adult	$2,056	$75
Senior	$1,843	$63

Read our methodology

How does gap insurance work in Tennessee?

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 Tennessee

Many insurance companies, including major carriers, offer gap insurance in Tennessee. 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.

Tennessee gap insurance: FAQs

Is gap insurance required in Tennessee?

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

Who should buy gap insurance in Tennessee?

If you have a car loan or lease in Tennessee, 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 Tennessee?

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 Tennessee?

Tennessee gap insurance covers leased cars when the driver owes more than the vehicle's current market value. You can drop gap coverage once your car is worth more than what is owed.