Texas gap insurance: Everything you need to know

How much is gap insurance in Texas?

On average, gap insurance in Texas costs $3,364 a year, but rates vary by company. The cost of your vehicle also affects gap rates. Expensive or luxurious cars tend to depreciate faster than standard vehicles, meaning gap coverage would have to pay more, which increases coverage rates.

Cheapest gap insurance companies in Texas

The cheapest company for gap insurance in Texas is Auto Club Enterprises (AAA), with an average annual cost of $2,215. Not all car insurance companies offer gap coverage, and rates vary significantly by company.

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

Company	Auto insurance rates with gap premium	Gap premium
Auto Club Enterprises (AAA)	$2,215	$75
Mercury Insurance	$3,251	$33
Progressive	$3,556	$62
Farmers	$3,899	$90

Read our methodology

Average gap insurance cost in Texas by city

Gap insurance costs the most in Houston, with an average rate of $3,941, while Bowie has the lowest rate at $2,913. Where you live in Texas 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 Texas

City	Auto insurance rates with gap premium	Gap premium
Bowie	$2,913	$78
Bishop	$2,994	$55
Kermit	$3,000	$80
San Antonio	$3,087	$60
Frisco	$3,116	$64
Higgins	$3,139	$96
Austin	$3,156	$66
Crystal City	$3,167	$74
Beaumont	$3,209	$56
Fort Worth	$3,246	$67

Read our methodology

How much is gap insurance in Texas 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 $13,202 per year, while a 25-year-old pays around $4,129 annually.

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

Age group	Auto insurance rates with gap premium	Gap premium
Teen	$13,202	$227
Young adult	$4,129	$82
Adult	$3,364	$70
Senior	$3,196	$57

Read our methodology

How does gap insurance work in Texas?

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.

Once your loan is less than the value of your car, you can drop gap coverage. While you can always cancel gap insurance, you may be unable to add it anytime. Most insurers want you to add the coverage quickly after buying a car.

Additionally, many lenders require gap insurance when getting your loan. Although you can get gap coverage through your lender or car dealership, adding it to your current auto policy is usually cheaper.

Where to buy gap insurance in Texas

Many insurance companies, including major providers, offer gap insurance in Texas. You can add this coverage to your existing car insurance policy or buy a standalone policy.

The best way to get gap coverage is to add it to your auto insurance policy. Car dealers and lenders also offer gap insurance, but their policies are mostly expensive, making them less budget-friendly.

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.

Texas gap insurance: FAQs

Is gap insurance required in Texas?

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

Who should buy gap insurance in Texas?

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

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 Texas?

Texas gap insurance covers leased cars when the driver owes more than the car's current market value. You can remove gap coverage once your vehicle is worth more than what you still owe.