How does GAP insurance work after a car is stolen?

GAP insurance covers theft of your vehicle to compensate you for the amount you owe on your car loan in excess of the fair market value of the car.

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Rachel Bodine graduated from college with a BA in English. She has since worked as a Feature Writer in the insurance industry and gained a deep knowledge of state and countrywide insurance laws and rates. Her research and writing focus on helping readers understand their insurance coverage and how to find savings. Her expert advice on insurance has been featured on sites like PhotoEnforced, All...

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Written by Rachel Bodine
Feature Writer Rachel Bodine

Dan Walker graduated with a BS in Administrative Management in 2005 and has been working in his family’s insurance agency, FCI Agency, for 15 years (BBB A+). He is licensed as an agent to write property and casualty insurance, including home, auto, umbrella, and dwelling fire insurance. He’s also been featured on sites like and Safeco. He reviews content, ensuring that ex...

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Reviewed by Daniel Walker
Licensed Auto Insurance Agent Daniel Walker

UPDATED: Jun 10, 2022

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Things to Remember...

  • GAP insurance provides valuable coverage to help pay your auto loan balance if your car is stolen
  • You should report any theft of your vehicle immediately to the police and notify your insurance company so that the claim process can begin
  • Having comprehensive coverage can be helpful in the event your car is stolen, but not required with a separate GAP policy

Imagine going to get into your car one morning, only to find it missing because someone has stolen it. You may be understandably concerned about what this means for your car loan and wonder, does GAP insurance cover theft?

Losing property due to theft is a distressing experience for anyone, and you may not know what to do. This article gives you information about protecting yourself financially, what steps to take if your car is stolen, and how GAP insurance can help. GAP insurance is available for older vehicles as well as newer ones, in case you were wondering if your older car was able to be protected.

You will also learn about additional insurance options you should consider and the importance of adequately reporting your claim.

How does GAP insurance work?

GAP insurance works by paying a car owner the difference between the vehicle’s market value and any amount owed on a car loan

Most vehicles depreciate significantly and almost immediately after they are purchased. If you buy a new car and take out a loan to fund the purchase, the car will be worth less than the amount of your loan by the time you drive the car home from the dealership.

Depreciation is important to understand because most car insurance policies pay you for the vehicle’s market value if the car is totaled or otherwise lost. This can cause a gap in the amount you receive from the insurer on your claim and the amount you owe to the lender.

Most people cannot afford to continue to make car payments on a vehicle that they cannot use. GAP insurance pays the difference, so you do not have to.

GAP insurance is a smart purchase if you did any of the following when buying your car: 

  • You put less than 20% down
  • You rolled over a previous loan balance into a new purchase
  • You leased a vehicle
  • You have a car that loses value more quickly than other models

 It is also worth considering GAP insurance if your auto loan term is 60 months or more.

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How can you get GAP insurance?

When you purchase your car, the car dealer will likely offer GAP insurance with your financing package. You can also contact your car insurance company to add GAP coverage to your policy.

Under a car lease arrangement, the company financing the lease will also offer GAP insurance. You will likely have the option to add the cost to your monthly payment.

Does GAP insurance cover theft?

Most GAP insurance will provide coverage for losses from theft if all requirements are met. You will usually have to submit a police report to the insurer.

Your insurer will have to review the facts related to the theft and determine whether the vehicle is a total loss. You can incur a total loss if no one ever finds the car after the robbery is reported. Your insurer may specify a duration of time that has to pass before the vehicle can be declared as missing forever.

A total loss can also be declared if the vehicle is found, but significant damage was done to it before being left behind by the thief. 

You can determine the amount you may receive from your insurer using this totaled car value calculator. The insurance company may take some time to process your claim. Any separate GAP insurance will probably not get settled until your car insurer has made a final decision.

Do you need comprehensive coverage?

Comprehensive coverage pays for the market value of your vehicle in the event of a theft. GAP insurance only covers the difference between the market value and the amount you owe on the loan agreement.

Your GAP insurance company may or may not require you to have comprehensive coverage on your vehicle. If you do not have comprehensive coverage, you can be left to pay a significant portion of your auto loan without help from your insurance company.

In addition to theft losses, comprehensive coverage also pays you for damages that are not the result of a collision with other automobiles, such as the following:

  • Damage caused by weather
  • Fire damage
  • Destruction from vandalism
  • Incidents involving animals

You may have only signed up for the state-required liability policy to try to save money. But you can always review your policy and add comprehensive coverage at any time to avoid leaving a sizable outstanding auto loan balance.

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How does the insurer protect from false claims?

Insurance companies have determined that fraudulent claims for theft are filed at a higher rate than for other types of claims. Most companies have a thorough process to handle a theft claim.

The insurer will conduct an extensive investigation of any reported theft to verify that it is not fraudulent. This process can take some time and may cause you to wait on any payout. Read here to find out how long an auto insurance claim can be open.

You should know that any investigation is standard, and you should try to facilitate the process by giving all requested information as quickly as possible.

What should you do if your car is stolen?

If you find your car missing, you may not know what to do. The first thing you should do is contact the police and file a report. Make sure to get a copy of the police report.

Next, you will need to notify your auto insurance company of the theft. You can inquire about the process for filing a claim for a payout if you have comprehensive coverage. Be sure to check if there is a waiting period in case the vehicle is recovered.

You will then want to file a claim with your GAP insurance and submit all requested documentation. While you are waiting for a determination on your claims, you should continue to make your loan payments so your credit is not negatively impacted.

Final Thoughts on How GAP Insurance Works

GAP insurance helps protect you from having an outstanding loan balance if your vehicle is stolen. You can purchase GAP coverage when you buy your car or contact your car insurance company to add the coverage.

Even if your GAP insurer does not require you to have comprehensive coverage, you should add this protection to your auto insurance to avoid owing a large balance on your auto loan.

If your car is stolen, file a police report and provide all necessary documentation to your auto and GAP insurance company to file a claim. Your claim will be investigated, so be prepared for it to take some time before you receive compensation.

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