Best Cheap Gap Insurance Companies in Tennessee: Quotes, Discounts (2023)

Tennessee drivers who lease or finance a new vehicle should consider adding gap insurance to their overall coverage. Gap insurance can protect you financially if your car is stolen or you’re in a car accident and your vehicle is totaled. Finding a policy with gap coverage is simple when you compare quotes with Insurify, the easiest way to score the best and cheapest coverage.

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Best Companies for Gap Insurance in Tennessee

Now, not every car insurance company operating in Tennessee offers gap coverage to customers. Gap coverage is not part of a standard auto insurance policy. Below is a list of the best companies that offer gap coverage and the average monthly premium for car insurance with gap coverage.

See More: Cheap Car Insurance in Tennessee

What is gap insurance?

Gap insurance is a special car insurance policy that covers leftover financial obligations if a car is totaled. It stands for “guaranteed asset protection.” A gap policy on a leased vehicle covers any leftover lease payments, and a gap policy on a financed vehicle pays the leftover balance on a car loan.

If you total a leased vehicle, you are still obligated to pay the monthly lease payments until your lease expires. If you have a three-year lease and you total the car in the first six months, you’ll continue to owe payments to your leasing company for 30 months. If your lease payment is $200, you’ll be out $6,000.

When you purchase a car with a loan, it’s common for that car’s value to drop below the remaining balance on the loan, especially in the first year. Gap insurance covers the difference between the loan amount and the actual cash value of the vehicle.

Your loan or lease agreement could come with a gap waiver. This waiver releases you from the obligation to pay the remaining monthly payments of your lease or the leftover loan balance of your vehicle. These aren’t very common, but you can negotiate for one if you’re extra savvy.

Who should buy gap insurance in Tennessee?

There are two instances where drivers are better off purchasing a gap policy. First, people who owe more than their car is worth—a.k.a. being underwater—should buy a gap policy. There are several ways in which your car can be worthless than the balance on your loan:

• You buy a new car, as depreciation is 20 percent on average in the first year.

• You put a small down payment on your loan.

• You have a high interest rate on your car loan due to bad credit.

• You put a lot of miles on your car annually.

When you total your vehicle, you’ll need to cover a ton of expenses. You’ll pay for a down payment on a new vehicle, its title and registration fees, and possibly higher insurance premiums, and you may need to cover any traffic fines or penalties. Paying for the remaining balance on your car loan doesn’t need to be one of those additional expenses.

The second occasion where gap coverage is recommended is for people who lease their vehicle. Their leasing company may even require it. The cost of lease payments can be very expensive. Gap insurance covers these expenses so you don’t have to.

Tennessee Gap Insurance Laws

Gap insurance is not required in the state of Tennessee. It’s optional coverage that drivers can purchase if they want to. However, Tennessee does allow lenders and lessors to require gap insurance as part of the loan or lease agreement.

The state minimums for Tennessee car insurance are as follows:

• $25,000 bodily injury per person

• $50,000 bodily injury per accident

• $15,000 property damage per accident

Beyond minimum coverage requirements, you can purchase collision coverage, comprehensive coverage, underinsured and uninsured motorist protection, medical payments coverage, and gap insurance.

How much gap insurance do I need in Tennessee?

How much gap insurance you need for a financed vehicle depends on its value and the remaining balance on your loan. You can look up your car’s fair market value with Kelley Blue Book—that’s how much your insurance company will pay out in the event of a total loss. Subtract the fair market value from the loan balance to determine your insurance limits.

If you own a leased vehicle, simply multiply your monthly payment by the number of months left in your lease agreement. Each insurance company will have minimum and maximum limits you can purchase. Just be sure that the coverage limit you choose covers the minimum amount you need.

See More: How Much Car Insurance Do I Need?

How Gap Insurance Works in Tennessee

Gap insurance in Tennessee works like this: it pays the remaining balance on your loan after the comprehensive, collision, or liability policy pays the actual cash value of your totaled vehicle. A vehicle is totaled when it sustains more damage than the car is worth. If the car was leased, the gap policy pays out owed monthly lease payments to the lessor.

How Much Gap Insurance Costs in Tennessee

The total cost to insure a car with gap insurance in Tennessee is $223 a month. The gap coverage portion of that policy will typically cost $1 to $5 a month. Your exact costs will depend on your loan balance, car value, and/or lease payments, in addition to your driving history and other personal factors.

See More: Average Cost of Car Insurance in Tennessee

How to Buy Gap Insurance in Tennessee

Looking for the best deal on gap insurance? Shop with Insurify. Fill out one confidential form to compare insurance quotes for six or more car insurance policies with gap coverage. You can adjust your coverage options to understand the full range of policies and their costs. Only buy if the price is right. And don’t forget to save your profile for future comparison-shopping.

Frequently Asked Questions: Gap Insurance in Tennessee