When you’re going out to buy a brand-new RV, your salesman probably pitched you a bunch of add-ons. You might have passed on the satellite antenna or awnings, but when they mention GAP insurance, you probably paused. Insurance is good, right? Well, maybe.
Is RV GAP insurance worth it? RV GAP insurance is a special type of insurance that is designed to protect motorhome owners from incurring losses that go beyond the RV’s value if they are still making payments on their RV. If your RV’s payment plan will keep your value “underwater” for long periods of time, GAP may be worth it.
Most people immediately assume that GAP insurance is a scam or a rip-off, but this really isn’t true.
Before you go to a motorhome dealer, it’s a good idea to understand the basics of GAP and figure out if it’s right for you.
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Is RV GAP Insurance Worth It?
Going RV shopping can be exciting, but there are a lot of moments where you might need to take a step back. With GAP insurance, the debate about it is a major one.
Understanding what it is and what it can do for you can help you make the right decision for your particular situation.
What Is GAP Insurance?
GAP stands for Guaranteed Asset Protection, and it’s a unique form of insurance that you can only really buy at the dealership.
The concept behind GAP insurance is simple: if you’re still making payments on the RV you’re buying and you owe more than what the RV is worth, the GAP insurance will cover the difference in the event of a total loss.
With GAP insurance, you get to pay the entire fee for the insurance in one lump sum. It’s also known as a high-commission sale add-on for sales staff.
RV dealerships, much like car dealerships, can make a serious amount of money by selling GAP coverage as part of their careers.
So, they might push it even when it won’t make sense.
Can You Get GAP Insurance on An RV That’s Paid In Full?
Because of the way that GAP insurance works, you can’t really get it on an RV that’s already been paid. It only covers the payments you’d need to make in the event of a total loss that occurs before you are able to pay it to its market value.
Can’t Collision Coverage Pay for The Interest?
This is a common misconception: that RV owners and car owners tend to have when it comes to their insurance policy.
The idea that “insurance will take care of everything” is a common one, but it’s not really true when you’re still making payments on your vehicle.
Collision insurance will only cover the amount you get for the true value of the car. If you owe a lot of interest or your loan hasn’t scratched the surface of your car’s value, you’re going to have to pay the difference out of pocket unless you have GAP insurance.
Related reading: Do You Need Collision Insurance on a Travel Trailer?
Who Is Eligible For GAP Insurance?
GAP insurance is primarily a dealership-only thing. That being said, there are several things that have to be true in order for you to get GAP:
- You have to be financing OR leasing your RV. No financing means that you won’t have any reason to get GAP. If you’re leasing, GAP insurance is meant to help protect you and the lease dealer from losses.
- The dealership has to offer GAP insurance, or you have to get it online. It is possible to get a GAP insurance policy online, but it’s rare. Many online GAP insurance retailers can be picky with lenders so there’s a chance you might have a harder time with getting covered this way.
- The loan you have needs to be eligible for GAP insurance. Most companies will offer GAP insurance for RVs up to $500,000 in value. If you are trying to insure a specialty RV, or one that costs over half a million dollars, you might need to get a customized plan from a specialty company.
What Does GAP Insurance Cover?
The term “GAP” is a double-entendre when it comes to coverage. Along with its acronym, GAP insurance most famously covers the “gap” between a vehicle’s principle and interest-included price tags. That’s not all GAP insurance can cover, though!
Depending on the policy that you take, GAP insurance can also cover:
- The Collision Insurance Deductible. When you have an RV accident, your standard insurance policy will expect you to pay a nominal amount of money to cover a portion of the repairs before the insurance kicks in. GAP coverage often can help pay that amount.
- Fees on Your Loan. If you were in the process of paying off fees alongside your interest, GAP insurance can help cover that too.
- Total Loss Gaps from Theft. You don’t have to have a total loss accident claim to get your GAP insurance to kick in.
What Won’t GAP Insurance Cover?
GAP insurance is great, but it’s not a silver bullet for financial loss. It will only kick in if your RV is deemed to be totaled—not if it just needs repairs. Many people don’t realize this, but GAP will not cover any of these issues:
- Repairs Not Covered by Insurance. We can’t emphasize this enough. If your regular insurance policy won’t pay for repairs and the RV isn’t deemed totaled, GAP insurance will not cover it.
- Roadside Assistance. This is a completely separate insurance rider altogether.
- Medical Bills. In the event that you or someone near you gets injured as a result of a collision, it will be your standard vehicle insurance policy that will need to do the covering. Any bills that are left over from that coverage will be yours to pay, since GAP insurance only covers your RV’s interest rates.
- Destroyed Belongings. Personal affects that you leave in your RV are not considered to be part of the RV’s value, nor are they even remotely touched by RV GAP insurance.
- Gaps Left Past Expiration Dates. Let’s say you have a GAP insurance policy that keeps you covered for 10 years, but your loan will remain underwater for 12 years. If you total your RV in the first 10 years, you will be covered. If you total it after then, you won’t be.
A shocking number of people assume that GAP insurance can act as a cheaper substitute for good motor vehicle insurance.
This is not the case, nor will it ever be. GAP insurance is only there as an add-on for an already-solid policy.
Does Progressive Have RV GAP Insurance? [RV Insurance Agency]
Does Progressive have gap insurance? Yes, for about $6 per month on average you can have a GAP Insurance from Progressive. You can expect around 25% more than your car’s depreciated value.
In case your car is totaled, gap insurance will cover the difference between your loan balance and what your car is worth, minus your deductible.
Related reading: How Much is it to Buy Back a Totaled RV From Insurance?
Progressive
Another major name in the insurance game that offers up RV GAP Insurance is Progressive.
Much like what you might see with their car insurance policies, a single application on Progressive will let you compare policies from other providers and let you pick the most affordable one.
Good Sam
Good Sam is one of the only insurance companies in America to be totally devoted to RV insurance. Along with giving coverage to motorhomes and RVs, you can get coverage for awnings, accessories, and more.
They also offer full-time motorhome insurance and storage insurance, making them a great go-to for veterans of the RV lifestyle.
I have listed some of the the best rated RV insurance providers I have found on the market at the moment:
| RV Insurance Agency | Coverage Options |
|---|---|
| Good Sam (Top Choice!) | . 96% overall customer satisfaction rating . Customers report average savings of $321 per year . Total-loss replacement for motorhomes and travel trailers . Specialized coverage for full timers or first-time weekend RV’ers . RV storage option allows you to save even more by turning off coverage when your RV is not in use! |
| RVInsurance.com | . Customers report average savings of $321 per year . Covers everything from class A motorhomes to pop-up campers . Quote and buy online . Speak to a professional, licensed agent . Fully licensed, multi-line agency can quote your auto, home, boat and other insurance products |
| National General | . Top rated C=choice: A+ BBB rating . “Turn Off” for liability & collision during storage – Save 53% . Cover your personal belongings or attachments . Full-timer coverage options . Mexico insurance options . Total Loss RV replacement . 24-hour claims support |
| Progressive | . Progressive Insurance – Trusted by Over 18,000,000 . Competitive rates, tons of discounts (safe driver, pay-in-full, multi-car, multi-policy, quoting online & more) . Name your price Tool® . Comprehensive List of RV Covered Items . Roadside Assistance Included . Recreational Vehicles, Trailers & Fifth Wheels |
How Much Money Can You Get From A GAP Insurance Claim?
When you’re financing an RV, you’re looking at taking on debt—a lot of it, really. Depending on the model of RV you’re looking to buy, you could be incurring anywhere from $15,000 to $250,000 or more.
Like with any other type of major purchase financing, there’s going to be interest involved.
Interest can quickly add thousands of dollars onto the total amount you’ll pay over the course of several years. It can be wild when you realize how much underwater you can be.
RV loan interest rates can vary from around 7 percent to 4 percent depending on your credit score and loan repayment schedule.
Depending on the price of your RV, this can easily add $10,000 to upwards of $50,000 onto your bill.
Most GAP insurance plans will cover almost all the interest that you owe until the amount you owe meets the actual value of your motor home. That means that you can expect to see as much as $50,000 covered on your bill. It also can cover the deductible on your insurance bill.
Can GAP Coverage “Max Out?”
Absolutely. Because of the sheer factor of feasibility, most GAP insurance providers have a maximum payout that they will give for a claim. On a typical policy, the most you can get from a GAP insurance claim will be $50,000.
Some GAP insurance plans don’t only cap their payouts, but the number of years they’re willing to protect an RV model.
The typical “expiration date” for a GAP insurance policy is 10 years or at the point where you’re currently paying off the principal amount of your loan.
Before you decide to sign on the dotted line regarding your RV’s GAP insurance, it’s best to read what are the limits of the policy you’re about to buy.
This way, you will be able to better gauge whether the policy is worth the price or not.
How Much Does RV Gap Insurance Cost?
How Much Does RV Gap Insurance Cost? If you are going to get your GAP insurance “rolled into” your RV’s loan, you should expect it to add anywhere from $2 to $20 per month onto your monthly premium.
How much your premium will increase will vary depending on the exact terms, plus the amount of coverage you’re snapping up.
Though the payouts for this kind of car can be high, GAP insurance itself is surprisingly affordable. Most policies will only cost a one-time payment of several hundred dollars. Policies for more expensive RV models might be slightly higher.
When Does It Make Sense To Buy Gap Insurance For An RV?
Cautious people might say that it “always makes sense” when you’re financing, but this isn’t really true.
Sometimes, it’s just more reasonable to accept the small risk of going underwater on a loan—especially if you’re only going to be paying it off for a short time.
People who are good candidates for GAP insurance include those who:
- Are required to buy it as a stipulation of a lease. Some companies won’t let you lease an RV without GAP insurance. If you lease from them, you need GAP insurance by default.
- Have less than a 20 percent down payment for RV financing. People don’t realize this, but the down payment that you put on vehicle loans often goes straight towards interest payments. If you don’t have at least 20 percent down, you could be underwater for a serious length of time.
- Will be paying a loan that’s greater than 60 months in length. RV financing loans can be as long as 240 months or more, depending on how much you’re financing. Most people won’t be able to recoup the “gap” of insurance for 20 years on their own without serious hardship. Having GAP insurance can help prevent serious financial damage during a long-term loan.
- Will be living in their RV full time. Losing a recreational RV that you use during the summer can be a devastating blow, but you can recover from it pretty easily. If you live in the RV you’re financing and it gets totaled, you are likely going to be fiscally devastated. To avoid serious problems, getting GAP insurance just works in your favor.
- Bought an RV model that’s known for quick depreciation. RVs are a lot like cars when it comes to depreciation. Some RV models depreciate faster than others, especially when it comes to larger groups. If you just bought an RV that gained a reputation for depreciation, GAP insurance can save you a ton of money in the event of a total loss.
- Intend to add lots of miles to your RV’s odometer. Driving your RV around constantly can also cause your RV’s value to depreciate at a breakneck speed—even if it’s a model known for retaining its value. Getting GAP insurance could be a smart move if you’re considering booking multiple cross-country visits.
- Want additional peace of mind. Even if you would be able to recover the costs of paying off the interest from your RV loan well, there’s something to be said about having that peace of mind that comes with extra insurance. Nothing is stopping anyone from getting insurance just to feel a little more confident on the road.
Should I Buy Gap Insurance From Dealership?
Should I buy gap insurance from dealership? No, it is not necessary to buy GAP insurance from your dealership. Of course, your car dealer will try to sell you this type of coverage because they make money from the business, but you don’t necessarily need it.
GAP insurance is only necessary if you do not deposit a significant amount of money on your purchase.
You can, as long as your RV purchase is still fairly new. Most major insurance companies offer some kind of GAP insurance for RVs and cars, but they don’t always advertise it.
If you want to get GAP coverage elsewhere, ask for GAP by name. They will be happy to help you out there.
If you choose to go online (and away from a dealership) for GAP insurance, don’t be shocked if you need to pay for your entire policy out of pocket.
This fact alone can make the option of outside GAP insurance rather unappealing.
In most cases, it’s better to just work through the dealership if you don’t have much money in a bank account. This is because most dealerships will be able to roll the price of the GAP insurance into your car loan.
This, in turn, can help make it more manageable on your wallet.
When Should You Avoid GAP Insurance?
There are a couple of instances where GAP insurance just doesn’t make sense. The most common times when it makes sense to say “no” to GAP insurance include:
- You’ve already paid for your RV in full, or are on the verge of paying it. This is the most common reason to say no to GAP. if you don’t have a gap between your interest and principal, you don’t really have any reason to buy it.
- You have enough money in savings to be able to pay the gap between interest and principal outright. If you already have this much in savings, you can probably go without GAP if you wanted to. That being said, some folks still would rather just go with insurance because it can help keep their costs low in the event of a total loss.
- You are going to spend most of your RV time in your parking lot. If the risk of a collision or total loss is going to be astronomically low, you might want to consider just skipping GAP altogether.
What Does RV Insurance Cost?
What Does RV Insurance Cost? The average RV insurance cost should total between $200 to $2,000 even with added extras. Every RV insurance company varies when it comes to the pricing of their coverages.
Related reading: How Much Does Class C RV Insurance Cost? Complete Buyer’s Guide
Another deciding factor in the price of your RV insurance is the state that you live in. For example, an RV insurance premium in Michigan could land you somewhere near $4,490. While California’s rates are between $860 to $4,000.
The following table shows the average RV Insurance Rates across 6 States:
| States | Insurance rates per year (USD) |
|---|---|
| North Carolina | $875 |
| Oregon | $895 |
| Massachusetts | $1,135 |
| Michigan | $4,485 |
| California | $4,085 |
| Texas | $1,435 |
While Good Sam is a big hit among many who go with this company, there are other RV insurance companies that will be competing to add you to their clientele list:
- RV America
- Blue Sky
- Progressive
- Nationwide
- Geico
- Farmers
- Allstate
How To Cancel Your GAP Insurance
How To Cancel Your GAP Insurance? It is very easy, simply contact the financial manager of your car dealership if you bought your car from a dealer. You will receive a cancellation form, which must be completed and signed in full, indicating that you wish to end the gap coverage.
Can I Cancel GAP Insurance At Any Time?
Can I cancel gap insurance at any time? Yes, if you no longer need the gap insurance you can cancel at any time and you will receive a refund prorated according to the length of time that you kept the policy in effect.
Our Final Take
GAP insurance is a misunderstood type of coverage that can offer a huge amount of protection for a low fee.
With the sheer cost of a typical RV and the interest that can be tacked onto financing it, it’s easy to see why so many people prefer to get GAP insurance.
Truth be told, getting GAP insurance is never a bad idea when you’re financing your RV. With the worst-case scenario, you’ll have spent a bunch of money and gotten peace of mind for years. If you end up needing to use it, GAP insurance can easily save you tens of thousands of dollars.
Our take is that getting GAP insurance is a wise choice for the vast majority of people looking into RV ownership or leasing.
So, when you’re talking to your dealer or putting together your purchase plan, make sure to mind the GAP. Your wallet (and sanity) will thank you.
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