Sara Routhier, Managing Editor and Outreach Director, has professional experience as an educator, SEO specialist, and content marketer. She has over five years of experience in the insurance industry. As a researcher, data nerd, writer, and editor she strives to curate educational, enlightening articles that provide you with the must-know facts and best-kept secrets within the overwhelming world o...

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Joel Ohman is the CEO of a private equity-backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He also has an MBA from the University of South Florida. ...

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Reviewed by Joel Ohman
Founder, CFP®

UPDATED: Dec 3, 2021

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Summary

  • Cars lose up to 10% of their total value as soon as you drive them off the lot
  • If you total your car when you owe more than it’s worth, you’ll still have to repay your loan
  • Loan-lease payoff insurance protects you from paying the difference on your loan by covering the amount you still owe
  • Loan-lease payoff sounds similar to GAP insurance, but there are key differences between the two

It’s a well-known fact that the moment you drive your newly purchased car off the dealership lot, its value drops. Ideally, you’d spend years with your brand new car, but there is always the chance that you could get into an accident. This is why some car insurance companies that offer loan lease payoff can get away with charging more. They charge more now and pay off your loan should you have a total loss while underwater on your loan or lease.

This type of auto insurance is commonly known as gap insurance. It covers the gap between the value and your loan. In some cases, it covers up to a set dollar amount.

Loan-lease insurance protects you in case you total your car, and you owe more on your lease than the vehicle is worth. If you’re about to buy or have recently purchased a brand new car, loan-lease payoff coverage is something you should consider.

If you’re ready to look at affordable car insurance companies that offer loan-lease payoff, you should always start by shopping around to ensure you get the best rates. If you’re ready to see what quotes might look like for you, enter your ZIP code in our free tool today.

Car Insurance Companies That Offer Loan-Lease Payoff

Most major car insurance companies will sell you loan-lease coverage when looking to buy a car (whether it’s new or used). It’s harder to find car insurance companies that don’t offer a loan-lease payoff.

Before you begin shopping, you should also decide if you need loan-lease protection. For example, if your car loan is small but you’re on the fence about loan-lease payoff, no coverage is probably acceptable.

If you want to know if your preferred company offers loan-lease payoff insurance, the fastest way to learn what it offers is to contact an agent. First, however, you can start with the following companies.

Progressive

For loan-lease payoff, Progressive lumps it together with GAP insurance. Progressive will cover up to 25% of your vehicle’s cash value.

Allstate

Allstate offers loan-lease and GAP insurance for new and used cars valued at $100,000 or less. In addition, Allstate will cover any amount owed under $50,000.

Additionally, Allstate owns Esurance, the popular online car insurance. Esurance offers the same loan-lease coverage. Allstate has announced that Esurance will be phased out in the coming years, so it might be best to go with Allstate.

American Family Insurance

American Family is another insurance company that lumps GAP with loan-lease insurance. With Am Fam, your loan-lease insurance covers up to 25% of your car’s actual value.

Nationwide

With Nationwide, your loan-lease coverage will cover any leftover amount on your loan as long as you pay the deductible.

State Farm

While State Farm doesn’t sell a specific loan-lease or GAP insurance plan, it does have a feature called Payoff Protector included with its comprehensive plan. This feature is automatically assigned to you if you get a loan through one of the banks State Farm is partnered with.

USAA

USAA is another car insurance company that doesn’t offer loan-lease insurance, but they offer a product called Total Loss Protection if you get your car loan from one of its banks. Total Loss Protection acts like loan-lease insurance.

Travelers

Another company that lumps loan-lease and GAP together, Travelers offers this protection under specific circumstances. You have to be the vehicle’s only owner, and you must have purchased it from a dealership.

What companies don’t offer loan-lease coverage?

While most car insurance companies offer some form of loan-lease or GAP insurance, you may be surprised to learn that GEICO does not. Therefore, if you are looking for loan-lease payoff, GEICO is not a viable option for you.

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What is loan-lease insurance?

Figuring out how auto loans work and what coverage you need can be confusing.

When you owe more on your vehicle than it’s worth, your loan is considered underwater or upside-down. If your car is totaled, your insurance company will only pay you for what the car is worth.

It sounds like a nightmare, but it’s easy to find yourself in this situation. Most cars lose up to 10% of their total value in the first month of the lot. So if you total your car in the first year you own it, there’s a good chance you’ll owe more than your insurance will pay.

Loan-lease insurance protects you from that. If you happen to total your car while you owe more than its value, loan-lease coverage will pay you out for the amount you still owe on your loan.

Loan-lease insurance is only available when you purchase the highest level of comprehensive coverage for your vehicle. While every company is different, loan-lease insurance generally pays up to 25% of your vehicle’s cash value.

Is loan-lease insurance the same as GAP insurance?

If you’re wondering, “Do I need loan-lease payoff insurance?” you should start by understanding what vehicles it covers and the difference between loan-lease and GAP.

Many people use the terms loan-lease and GAP insurance interchangeably, which are very similar. One of the reasons for this is that many car insurance companies offer loan-lease and GAP bundled together.

While some companies make no distinction between the two, they are not the same thing.

A significant difference between these types of coverage is the time you can purchase them in. GAP coverage has a narrow time frame to sign up for it — usually within the first 30 days of purchasing the vehicle.

On the other hand, loan-lease insurance can be purchased whenever you decide you need it.

GAP coverage is also available for cars that have never been titled before. Essentially, only brand new cars that you are the first owner of are eligible for GAP insurance. Loan-lease coverage can be purchased for used cars.

One good thing about loan-lease insurance compared to GAP coverage is that loan-lease tends to be a little cheaper. Rates from car insurance companies that offer loan-lease payoff insurance are lower because they cover used cars.

Get Quotes from Car Insurance Companies That Offer Loan-Lease Payoff

When you purchase a car, that vehicle is brand new to you regardless of its status of new or used, and you should be able to protect it and yourself in case of an accident.

For those wondering, “Is loan-lease payoff worth it?” it depends on your loan. If you owe more than your car is worth, the extra protection is definitely worth considering.

If you want to look at car insurance companies that offer loan-lease payoff insurance, you should shop around to find the best rates for you. When you’re ready to see what quotes might look like for you, enter your ZIP code into our free tool to get started.