Florida Gap Insurance: Laws & Companies Offering Coverage

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Gap insurance is not required by Florida law, but drivers in the state may need to purchase coverage if it's a condition of their lease or auto loan. You may also want to purchase a gap insurance policy if you've financed a new vehicle. If you lack this coverage and your car is totaled or stolen, you may end up owing more money on the car than you'd receive from your other forms of car insurance. In Florida, you can buy gap insurance either from your lending company, the dealership where you purchased or leased the car, or your auto insurance company. We recommend that you start by getting a quote from your insurer, as it will often offer the best gap insurance rates.

How Does Gap Insurance Work in Florida?

Gap insurance is an optional form of auto insurance in Florida, although it may be required by your lender if you took out an auto loan. A gap policy in Florida works similarly to gap coverage in other states. If your car is totaled or stolen, gap insurance pays any money you owe on the car that exceeds the insurance payout from your comprehensive or collision coverage. In order to purchase gap insurance, most insurers will require that you carry comprehensive and collision coverage, but these are also commonly required for financed vehicles.

If you loaned or leased a fairly new vehicle, gap insurance can be valuable because you may owe more money on the car than the car is currently worth, as measured by the vehicle's actual cash value. This is because the calculation for a car's actual cash value, which insurers use to determine the amount of money you'll get if your car is totaled, accounts for depreciation.

For example, say you purchased a new car for $30,000 last year and your insurance deductible is $1,000. The car has depreciated since you bought it, and it's now worth $24,000—even though your outstanding loan balance is $27,000. If you crash your car and the insurer considers it totaled, then your collision insurance would cover the car's actual cash value of $24,000 minus the $1,000 deductible. So you would receive $23,000. That means you would have to pay the lender $4,000 out of pocket. If you have gap insurance, it would cover the $4,000.

In addition to insurers, drivers can also purchase gap insurance in Florida from their car dealership or auto loan provider. Gap insurance policies can vary slightly between insurance companies in Florida; for instance, not all will pay your deductible. So using the example above, you would have to pay the $1,000 deductible, but gap insurance would cover the $3,000 owed on the auto loan.

Where Can I Buy Gap Insurance in Florida?

In Florida, you can purchase gap insurance from your auto insurance provider, or you can purchase a stand-alone gap insurance policy from your car dealer or lender. We recommend that you first ask your current insurer about adding gap insurance to your policy, as this is typically the cheapest way to purchase coverage. The cost of gap insurance from your insurer may be as low as $5 per month, whereas a gap waiver from a dealership will often be at least a few hundred dollars. Not all car insurance companies offer third-party gap insurance, but most of the top Florida insurers do offer gap policies.

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When you're shopping for gap insurance, we recommend that you compare quotes from multiple insurers in order to get the best rates. And make sure you understand the details of each policy before choosing one. Some insurers may impose the following limitations.

  • Restrict the amount of gap coverage based upon the value of the car
  • Require that you purchase other forms of insurance
  • Won't consider your deductible as part of the "gap" and therefore won't pay it
  • Require your car to be within a certain model year range or have a minimum value

List of Gap Insurance Companies in Florida

Of the largest auto insurers in Florida, the following companies offer either gap insurance or a similar policy.

  • State Farm (if you use State Farm to finance your loan)
  • Progressive
  • Allstate
  • USAA (called total loss protection)
  • Liberty Mutual (only offer new car replacement coverage, which is not available for leased cars)
  • Infinity
  • Travelers
  • Farmers (called residual debt coverage)

Florida Gap Insurance Laws

According to Florida law, gap insurance is considered by the state to be a form of credit insurance. Any owners or principals of a business that sells gap insurance need to be licensed as a credit insurance agent by the Department of Financial Services and fingerprinted. There's no licensing exam, but in order to be licensed, Florida's laws require that the person be one of the following.

  • An officer, salaried representative or commissioned representative of a life or health insurer. But they cannot be licensed as an agent to sell other classes of life or health insurance.
  • Employed by or associated with a lending institution, financial institution or creditor. In this case, they would only be licensed to sell gap insurance to those who use the institution to finance a vehicle.

Unlike owners and principals, Florida law doesn't require employees of a business to be licensed. But a business that sells gap insurance through multiple branches, such as local auto dealerships, needs to acquire a branch license for each of the locations. These licenses don't need to be renewed, just obtained once.

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Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.