Gap insurance is an essential financial safeguard for car owners who finance or lease their vehicles. It protects against financial loss when the car’s actual cash value (ACV) is lower than the remaining loan or lease balance in the event of a total loss. Progressive, one of the leading auto insurance providers in the U.S., offers gap insurance to eligible policyholders.
This article will guide you through the process of adding gap insurance to your Progressive policy, explaining its benefits, requirements, costs, and steps to ensure proper coverage.
What Is Gap Insurance?
Gap insurance, also known as Guaranteed Asset Protection (GAP) insurance, covers the difference between the actual cash value (ACV) of a vehicle and the remaining balance on a car loan or lease.
How Gap Insurance Works
When a car is totaled or stolen, an insurance company typically reimburses the policyholder based on the ACV of the vehicle at the time of the loss. However, cars depreciate quickly, and the ACV may be significantly lower than the remaining loan or lease balance. Gap insurance bridges this financial gap, preventing policyholders from paying out-of-pocket for the difference.
Example of Gap Insurance Coverage
Car purchase price: $30,000
Loan balance at the time of accident: $25,000
ACV determined by insurance: $20,000
Standard insurance payout: $20,000
Gap insurance coverage: $5,000 (covers the difference between the ACV and loan balance)
Without gap insurance, the policyholder would need to pay the remaining $5,000 to the lender.
Does Progressive Offer Gap Insurance?
Yes, Progressive offers gap insurance as an add-on to auto insurance policies. It is known as Loan/Lease Payoff Coverage, which functions similarly to traditional gap insurance.
Key Features of Progressive’s Loan/Lease Payoff Coverage
Covers up to 25% of the vehicle’s ACV (not the entire loan balance)
Available for newly financed or leased vehicles
Can only be added at the beginning of a policy or during a policy renewal
Only applies to vehicles insured under a full coverage policy (comprehensive and collision coverage required)
While Progressive’s Loan/Lease Payoff Coverage is slightly different from standard gap insurance, it still provides substantial protection in case of a total loss.
Who Needs Gap Insurance?
Gap insurance is recommended for:
Drivers with a new car loan: Vehicles lose value quickly, making it possible for loan balances to exceed ACV in the first few years.
Leased vehicle owners: Many lease agreements require gap insurance.
Drivers with low down payments: A small down payment increases the risk of being “underwater” on a loan.
Owners with long-term car loans: Loans lasting 60 months or longer increase the risk of negative equity.
If any of these apply, adding gap insurance through Progressive can be a smart financial decision.
How to Add Gap Insurance to Progressive
Step 1: Check Eligibility
Before adding gap insurance, ensure that your vehicle and policy meet Progressive’s eligibility requirements:
The vehicle must have a full coverage policy (collision and comprehensive insurance).
The car must be financed or leased (loan/lease coverage is not available for vehicles paid in full).
The policy must be new or renewing (cannot be added mid-term).
Step 2: Get a Quote for Gap Insurance
Progressive allows policyholders to get a quote online, via phone, or through an agent. Follow these steps:
Visit Progressive’s website and log into your account.
Select “Auto Insurance” and review available add-ons.
Enter vehicle and financing details (loan/lease information).
Request a quote for Loan/Lease Payoff Coverage.
Compare costs and review the coverage limits.
Alternatively, policyholders can call Progressive customer service at 1-800-PROGRESSIVE (1-800-776-4737) to discuss coverage options with an agent.
Step 3: Add Gap Insurance to Your Policy
If eligible, policyholders can add Loan/Lease Payoff Coverage by:
Selecting the coverage online during policy setup or renewal
Calling Progressive to request the addition
Contacting a Progressive insurance agent
Once added, the coverage will be included in the next billing cycle.
Step 4: Review and Confirm Coverage
After adding gap insurance, carefully review your policy to ensure:
The coverage is listed in your policy documents
The premium costs are accurate
The payout limit (25% of ACV) aligns with your financial needs
If any discrepancies arise, contact Progressive for clarification.
How Much Does Progressive Gap Insurance Cost?
The cost of Progressive’s Loan/Lease Payoff Coverage varies based on:
Vehicle value: More expensive cars may have higher premiums.
Loan amount: Higher loan balances could impact rates.
Policy details: Location, driving history, and other factors may influence pricing.
On average, gap insurance costs $20 to $40 per year with Progressive. This is significantly cheaper than purchasing gap insurance from a dealership, which can cost $400 to $700 upfront.
Alternatives to Progressive Gap Insurance
If Progressive does not offer gap insurance for your situation, consider the following alternatives:
1. Dealership Gap Insurance
Car dealerships often offer gap insurance as part of a financing package. However, it is typically more expensive than adding it through Progressive.
2. Third-Party Gap Insurance Providers
Independent companies provide gap insurance policies that can be purchased separately from auto insurance. This option is useful if Progressive does not offer gap insurance in your state.
3. Loan or Lease Agreements with Built-In Gap Coverage
Some lenders or leasing companies include gap insurance as part of their loan terms. Review financing agreements to check for existing coverage before purchasing additional insurance.
Pros and Cons of Progressive Gap Insurance
Pros
Affordable compared to dealership gap insurance
Covers up to 25% of ACV, helping with negative equity
Easy to add when purchasing or renewing a policy
Available through Progressive’s online system or customer service
Cons
Cannot be added mid-policy
Does not cover the full loan balance (only 25% of ACV)
Not available for vehicles without full coverage insurance
FAQs About Progressive Gap Insurance
1. Can I add Progressive gap insurance at any time?
No, Progressive only allows gap insurance to be added at the start of a policy or during renewal.
2. Does Progressive gap insurance cover negative equity from a trade-in?
No, it only covers the remaining balance of the original car loan, not negative equity from a previous vehicle rolled into the loan.
3. Is gap insurance required?
No, but it is highly recommended for those with loans, leases, or high depreciation vehicles.
4. What happens if I cancel my Progressive policy?
If you cancel your Progressive policy, gap insurance will also be canceled. It is important to arrange alternative coverage if necessary.
Conclusion
Adding gap insurance to Progressive can provide essential financial protection for car owners with loans or leases. By covering the difference between the ACV and remaining balance, it helps policyholders avoid out-of-pocket expenses in case of a total loss.
To add gap insurance to Progressive, ensure eligibility, obtain a quote, add the coverage during policy setup or renewal, and confirm the details. Compared to dealership options, Progressive offers a cost-effective solution for protecting your investment.
For those financing or leasing a vehicle, gap insurance is a smart financial decision that provides peace of mind and security.
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