Texas 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 Texas, but many lenders and leasing companies require it. In Texas, gap insurance costs an average of $3,783 per year, with Incline Insurance offering the lowest rates.

Last updated: Mar 6, 2026

How much is gap insurance in Texas?

On average, gap insurance in Texas costs $3,783 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 gap insurance in Texas is offered by Incline Insurance, with an average yearly cost of $1,676. Not all car insurance companies provide gap coverage, and rates can vary significantly among carriers.

Take a look at the table below to see the cheapest Texas insurance companies for gap coverage.

Company	Auto insurance rates with gap premium	Gap premium
Incline Insurance	$1,676	$39
Progressive	$3,135	$30
Auto Club Enterprises (AAA)	$3,365	$136
Farmers	$6,955	$140

Read our methodology

Average gap insurance cost in Texas by city

Gap insurance costs the lowest in Marfa at $2,817. 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
Marfa	$2,817	$68
Van Horn	$2,866	$69
Valentine	$2,898	$70
Presidio	$2,919	$70
Sierra Blanca	$2,945	$71
Big Bend National Park	$2,957	$70
Terlingua	$2,983	$71
Little River-Academy	$3,010	$70
Fort Davis	$3,027	$71
Troy	$3,053	$71

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 $11,126 per year, while a 25-year-old pays around $4,342 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	$11,126	$193
Young adult	$4,342	$97
Adult	$3,783	$87
Senior	$3,394	$71

Read our methodology

How does gap insurance work in Texas?

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, imagine you have a $40,000 car loan, but your vehicle's actual cash value is only $35,000. If someone steals your car, your insurance company reimburses 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 pays the remaining $5,000 you still owe on the loan. Without gap insurance, you must cover this difference out of pocket.

Once your loan balance is lower than your car's value, you can drop gap coverage. You can cancel gap insurance anytime, but you may not be able to add it whenever you want. Most insurers require you to add the coverage soon after you buy a car.

Many lenders also require gap insurance when you take out a loan. You can buy gap coverage from your lender or car dealership, but adding it to your existing auto policy usually costs less.

Where to buy gap insurance in Texas

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

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.

Texas gap insurance: FAQs

Is gap insurance required in Texas?

Texas law doesn't require gap insurance, but your lender may require it.

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 make a large down payment.

What is standalone gap insurance in Texas?

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 Texas?

Texas 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.