Do you need GAP Insurance and you want to know if State Farm can cover you? Keep reading to understand the basics of GAP Insurance, and learn what is available through State Farm! We’ll also explore alternatives to State Farm’s Payoff Protector.
This article will explain what GAP insurance does for you and who needs it. We’ll explain situations where the coverage from GAP insurance is unnecessary. By the end, you’ll have a solid grasp of whether or not you need a GAP insurance product and if you do, where you’ll want to look.
State Farm’s Payoff Protector – GAP Coverage
State Farm calls its GAP insurance Payoff Protector. This product waives the difference between the insurance payout in a total loss and the amount owed on the loan. State Farm’s Payoff Protector is included with all auto loans through State Farm Bank.
How To Get State Farm’s GAP Insurance
If your auto loan is through State Farm Bank, then Payoff Protection, or GAP insurance is included with your loan. Verify coverage on your paperwork with State Farm Bank. State Farm does not sell separate GAP Coverage.
Is Your Car Loan Through State Farm Bank?
Yes | No |
---|---|
Coverage Included with State Farm Auto Loan | State Farm GAP Insurance Not Available |
When Do You Need State Farm’s Payoff Protector (GAP Coverage)
State Farm’s GAP Insurance, called Payoff Protector, is included with auto loans through State Farm Bank.
Pro Tip: If your auto loan isn’t through State Farm Bank, you may still need GAP Insurance!
GAP Insurance is also available through most lenders (at an additional cost) and may be available through other auto insurance companies. The next section will help you decide if State Farm’s Payoff Protector is right for you!

State Farm’s Payoff Protector vs. Regular GAP Coverage
Coverage with State Farm’s Payoff Protector is similar to GAP Coverage available through other means. GAP Insurance stands for Guaranteed Asset Protection.
GAP insurance is available through vehicle financing options such as banks, credit unions, or dealerships. Some auto insurance carriers also offer GAP Insurance Coverage.
Pro Tip: GAP Insurance covers the difference between an insurance payout and the amount owed on a loan. This is much different than the usual payout from Comprehensive and Collision coverage, which is based on the value of your vehicle before the accident.
GAP Coverage Explanation |
---|
Car Loan Balance – Value of the Car = Remaining Loan Responsibility |
State Farm’s Payoff Protector is only available to customers who finance a vehicle through State Farm Bank. However, State Farm Bank may not be the most competitive way to finance a car, and it’s not available for every situation. Even if you aren’t able to get State Farm’s Payoff Protector, you may still need GAP Coverage.
We made a quick reference chart to help you decide if you likely need GAP Coverage. Find your financial situation in the chart. Did you buy or lease the vehicle? Is it financed? Then check the right-hand side of the table to see if you likely need GAP Coverage.
Situation | Do You Need GAP Coverage? |
---|---|
Leasing | Yes |
If the amount of your loan is more than the market value of the car once you drive it off the lot | Yes |
If your loan is equal to the market value of the car once you drive it off the lot | Maybe– Depends on How Quickly Car Will Depreciate Further |
If your loan is less than or equal to the market value of the car after driving it off the lot | No |
Pro Tip: Remember, if you purchase your vehicle with cash, there’s no point in purchasing GAP insurance as there is no loan to pay off in the event of a total loss.
A more in-depth explanation of who needs GAP Coverage is also available here. Some loan and leasing terms have GAP coverage built into the terms and payments. Check your lease or financial documents to verify before you pay for duplicate coverage.
The size of your loan is less than or equal to the market value of the car after driving it off the lot.

Other Options for GAP Coverage
Other companies offer GAP Coverage. This coverage is available for an additional monthly fee through most financial institutions. GAP Coverage may also be available through your auto insurance company.
Compare the price for GAP Coverage offered by:
- Car Dealership
- Credit Union or Bank
- Auto Insurance Add-on
There are other factors to consider besides the GAP Coverage expense when purchasing a vehicle.
Consider these other financing fees.
- Loan Origination Fees
- Interest Rates
- Early Payoff Penalties
Pro Tip: The interest rate of your car loan is an extremely important thing to consider. A few extra interest percentage points can amount to thousands of dollars over the course of the loan!
GAP Coverage is not available through every auto insurance company.
Speaking to an independent Insurance Agent can help you compare quotes for coverage.These Auto Insurance companies advertise GAP Insurance:
- Liberty Mutual
- Nationwide
- Allstate
- The Hartford
- Progressive
- Amica
Conclusion
Since State Farm’s Payoff Protector is only available to customers with an auto loan through State Farm Bank, make sure that you have coverage for new or leased vehicles through your financial institution or other auto insurance.
Frequently Asked Questions
What happens if I don’t use my GAP insurance?
If you purchase GAP insurance and don’t need it, it is like other insurance coverage. You pay for it in case you need it. GAP insurance is to protect from large financial burdens. There is no refund if you don’t file a claim.
Can I get a refund on my GAP insurance?
You can only get a refund on premiums paid but not covered. For example, if you paid for six months of coverage but canceled after two, you can get a refund on four months of premiums. You will not get a refund for the two months you had coverage, even if you didn’t file a claim.
What is the highest amount GAP insurance will pay?
GAP insurance only covers the difference between the insurance pay out (car’s value) and the loan amount. GAP insurance will not cover more than the loan’s remaining balance.
Sources
(2022). Car Totaled or Stolen? All Coverage Doesn’t Pay Equally. State Farm. Retrieved December 19, 2022, from https://www.statefarm.com/simple-insights/auto-and-vehicles/car-totaled-or-stolen-all-coverage-doesnt-pay-equally
(2022). Payoff Protector vs GAP Insurance. State Farm. Retrieved December 19, 2022, from https://www.statefarm.com/finances/banking/loans/payoff-protector

Jesse Cunningham V is a professional writer and licensed insurance agent. He has worked in the insurance industry in different capacities, starting as a customer service representative and working his way up to an independent agency owner. He is licensed in the states of Maryland and Pennsylvania for Property, Casualty, Life, and Health products. Jesse has worked with many national carriers, including Nationwide, State Farm, Travelers, and Liberty Mutual, and specializes in car and home insurance and health, life, accidental death, and disability insurance. He writes for multiple publications including FIXD and Bauple.com. All articles by Jesse are opinion-based. Speak with your licensed insurance agent about the particulars of your insurance before making any decisions.