GAP or lease/loan insurance coverage for a financed Tesla — how necessary?

GAP or lease/loan insurance coverage for a financed Tesla — how necessary?

We got our new Tesla 100% financed through Tesla (via US Bank) for 72 months but they do not offer GAP coverage. My insurer (GEICO) also doesn’t offer it in California.

I can go through the trouble of switching to Progressive, which will offer for $180/year lease/loan insurance that would cover the difference between loan balance and the actual value of the car, up to 25% of the value of the car. That way, if totaled while I’m inevitably upside down on the loan, I could still pay off that balance.

How many of you get such insurance? Is it necessary/critical? Or can I go without it? I have never financed a car before but couldn’t pass up the 1.49%, so I have no clue.

Mathew98 | 12 mars 2018

Alliant Credit Union offered me the same rate/term with an extra $6/month for gap insurance a few years ago. As with anything else, you don't need the insurance until something unexpected happens.

If $15 a month buys you a piece of mind, then definitely go for it. It's like getting one new 19" tire every year as a precaution.

TranzNDance | 12 mars 2018

$180/year for gap insurance sounds high. When I had it with Progressive, it was $18/six months.

john | 12 mars 2018

I got it from my lender for around $360 for the 5 year loan period.

TranzNDance | 12 mars 2018

Progressive's web page on gap insurance said the average premium is $5/month, so I'm wondering if OP had a typo or $180 included something else.

MelaniaFromBrentwood | 12 mars 2018

Nope. Not a typo. It’s weird and not sure why. Perhaps because my wife totaled her car (and 2 others) in a freak accident a year or so ago, and they’re fearful it would happen again?


TranzNDance | 12 mars 2018

Oh, that might just do it. Sorry.

patrick40363 | 12 mars 2018

US Bank includes it when you lease through them. Not sure why they wouldn't offer if if you finance through them,

MelaniaFromBrentwood | 12 mars 2018

Evidently US Bank doesn’t offer it on Tesla finance contracts. Sucks.

Mathew98 | 12 mars 2018

Ask your auto insurance if they offer GAP for your policy.

MelaniaFromBrentwood | 12 mars 2018

Thanks everyone - current insurer doesn't offer it. Does anyone know of a place to purchase STAND-ALONE GAP coverage? I'm sure someone offers it?

Silver2K | 12 mars 2018

Refi with allient and they will offer it real cheap. They even pay for your deductable! Not sure if thats normal, I've never had gap insurance. :)

john | 12 mars 2018

It's cheap insurance for what you get. If you ever totaled the vehicle and didn't have it you would be out your down payment and unless you were at the point where you were not upside down, you would still owe the bank money on the difference between what the insurance company would pay and the balance owed on the car. This could be a lot of money, especially if you made a 20% down payment.

dj-tesla | 12 mars 2018

so I guess GAP insurance is a must for a Tesla car

john | 13 mars 2018

By the way, on a leased vehicle it is imperative because early termination triggers a host of penalties and you could owe a lot of money after the insurance company pays the depreciated value and you are left with nothing but debt on a car you no longer have or are able to drive.

p.c.mcavoy | 13 mars 2018

@Fergie | March 12, 2018

“so I guess GAP insurance is a must for a Tesla car“

Nothing to do with a Tesla. Everything to do with financing 100% of a quickly depreciating asset. With a decent size down payment risk of being upside down in the loan not the same.

bill | 14 mars 2018

Both of my Teslas were financed through Allient and they offered GAP insurance for $399. It only covers the first three years but one nice extra with it is they pay the deductible up to $500 for up to 2 accidents per year. I had one accident with a $300 deductable so it came in handy.

bill | 14 mars 2018

@p.c. mcavoy "Nothing to do with a Tesla. Everything to do with financing 100% of a quickly depreciating asset. With a decent size down payment risk of being upside down in the loan not the same."

True but it may be an argument for financing the car close to 100% with such low interest rates. If you don't and your car gets totaled in the first three years you still end up with a big hit between what the insurance pays and the cost of a replacement.

p.c.mcavoy | 15 mars 2018

@bill - I totally understand why someone who chooses to finance near 100% might want GAP. Again, it has nothing to do with it being a Tesla. Statements you made apply equally well to any other brand of vehicle.

High Plains Drifter | 15 mars 2018

100% financing and 72 months term. Wow, you're upside down on your loan the second you take delivery.

john | 15 mars 2018

Other than leasing where you could owe more than the value of a new car, the GAP insurance covers the difference between what the insurance company says is the value of the vehicle and what a like replacement vehicle would actually cost you or the loan balance which could be more depending on your down payment.

MXDogCrate | 21 septembre 2018

Any updates here? Having the same issue. Thanks for Melania for bringing it up.

Yodrak. | 21 septembre 2018

Not at all necessary, but what's your risk tolerance?

NoMoPetrol | 21 septembre 2018

Just spoke with my insurance agent about this very topic. On a purchase, GAP insurance only has value until the value of the car is higher than the loan amount. After that, there is no GAP between what is owed and what the car is worth if totaled.

So, if they are offering you GAP insurance for the entire life of the loan, you will be paying for an unneeded coverage for a decent percentage of the time that you are paying off the loan. Not so sure how this information helps on a lease payment.

TeslaKU | 26 septembre 2018

Amica has been offering me low rates and super cheap GAP insurance on all my vehicles.

As was stated above, at some point the GAP is not worth the insurance and you should drop it.

aphull | 20 août 2019

From: --- Your lease comes with gap insurance.

Are there insurance requirements?
Yes. There are minimum coverage requirements unless you’re subject to state-specific terms:

$50,000 for property damage
$100,000 for bodily injuries to any one person
$300,000 for any one accident
Physical damage insurance for full value of vehicle
Maximum deductible: $2,500

Your lease comes with gap insurance.