What Is CarMax’s Gap Insurance? Do You Need It?

Last Updated on February 5, 2026

CarMax may offer Guaranteed Asset Protection (GAP) as part of certain financing deals to help protect you if your car is totaled or stolen while you still owe more on the loan than the vehicle is worth.

In plain English: if your auto insurer pays the vehicle’s actual cash value (ACV) after a total loss and that payout isn’t enough to pay off your loan, GAP is designed to cover (or waive) the difference.

So what is CarMax’s GAP coverage, and do you need it? This guide breaks down how it works, who it’s for, what it typically excludes, and how to compare it to GAP from your auto insurer or another lender.

1. GAP Protects Your Loan Payoff: It’s designed for total-loss situations where your insurer’s ACV payout isn’t enough to pay off your auto loan.
2. CarMax May Offer a GAP Waiver During Financing: Many lenders sell GAP as a waiver/addendum tied to the loan, and availability/terms can vary by state and lender.
3. Read the Contract for Caps and Exclusions: GAP often won’t cover past-due amounts, fees, or every add-on rolled into the loan—fine print matters.
4. Reevaluate Once You’re Not Upside Down: GAP becomes less useful as your loan balance drops; you may be able to cancel and request a prorated refund depending on your contract.

How CarMax GAP Coverage Works

CarMax sells used vehicles and offers financing options (including through CarMax Auto Finance and other lending partners). Depending on your deal and state, you may be offered GAP as an add-on during the financing process.

Important: In many transactions, what’s offered is a GAP waiver/addendum (a debt-cancellation agreement tied to your loan), not a separate “insurance policy.” Functionally, both are meant to address the same problem—owing a balance after a total loss—but the paperwork and rules can differ.

For a deeper explanation of how these products work, see our full guide: What Is GAP Insurance and Do I Need It?

What GAP Insurance Does (and Doesn’t) Do

GAP is designed for total loss situations—when your car is declared a total loss by your insurer, or in certain cases of unrecovered theft. (Here’s a specific breakdown on whether GAP covers theft.)

What it generally does:

• Bridges the payoff shortfall between your insurer’s ACV settlement (minus your deductible) and your remaining loan balance (subject to the contract’s terms and limits).
• Reduces out-of-pocket risk if you put little down, financed for a long term, rolled in negative equity, or bought a vehicle that depreciates quickly.

What it generally doesn’t do:

• Replace your collision/comprehensive coverage. GAP is usually secondary—your auto policy pays first.
• Cover every extra cost rolled into a loan. Many GAP contracts exclude items like past-due payments, late fees, and certain add-ons. Always read your specific contract for exclusions and caps.

Do You Need CarMax GAP Coverage?

You’re more likely to benefit from GAP if you expect to be “upside down” (owe more than the car is worth), especially in the first 12–36 months of the loan.

Quick Decision Guide

GAP is also common for leases (some leases include it automatically), but for financed vehicles it’s very situational. If you’re unsure, ask for a payoff quote, look up your car’s estimated value, and compare the two.

A Simple Example (Hypothetical)

Imagine you finance a vehicle with a small down payment. Early in the loan, depreciation can outpace payoff. If the vehicle is totaled, your insurer pays the ACV (minus your deductible). If that payout is less than your loan payoff amount, GAP coverage may cover the difference—so you’re not stuck paying off a balance on a car you can’t drive.

Do You Need GAP for a Used Car from CarMax?

Sometimes—but not always. Used cars generally depreciate more slowly than brand-new vehicles, which can reduce the “gap” risk. But you can still be upside down on a used car if you put little down, finance for a long time, or roll other debt into the loan. Here’s a deeper dive: Is GAP Insurance Worth It on a Used Car?

CarMax MaxCare vs. CarMax GAP Coverage

These products solve two totally different problems:

• GAP addresses a loan payoff shortfall after a total loss.
• MaxCare is a repair protection plan (often described like an extended service plan) that can help pay for covered mechanical breakdown repairs.

CarMax also includes a limited warranty on vehicles it sells. CarMax’s current policy is typically a 30-day limited warranty, and in some states it’s 90 days/4,000 miles (whichever comes first). Terms can vary by state and purchase date, so confirm your specific warranty details in writing. For background on how warranties generally work, see what a car warranty covers.

MaxCare benefits and terms can vary by vehicle and plan, but commonly include features like emergency roadside assistance and rental reimbursement for certain covered repairs (subject to the plan’s rules). For CarMax’s official overview of MaxCare, see their MaxCare page.

CarMax MaxCare Service Plans (Official)

Typical Requirements and Fine Print to Watch

GAP terms depend on the lender/administrator and state rules. Before you buy, ask for the full contract and look for these items:

• Coverage trigger: total loss and/or unrecovered theft.
• Coverage cap: some contracts cap the amount waived or limit coverage to a percentage of vehicle value.
• Exclusions: past-due payments, fees, certain add-ons, and other non-waivable amounts may be excluded.
• Insurance requirements: GAP usually requires you to maintain comprehensive and collision coverage. If you finance through CarMax Auto Finance, they state maximum deductibles may apply (commonly capped at $500 for collision and comprehensive).

CarMax Auto Finance FAQs (Official)

How Much Does CarMax GAP Insurance Cost?

Pricing varies widely based on the lender/administrator, the vehicle, your down payment, and your loan term. Some GAP products are priced as a one-time fee rolled into the loan, while others are priced as an insurance add-on through your auto insurer.

If you want to comparison shop, you can explore other options here: top companies to buy GAP insurance from—or read whether it makes sense to buy GAP insurance through a dealership.

Can You Cancel GAP and Get a Refund?

Often, yes. Many GAP products are cancellable, and if you paid upfront (or financed the fee), you may be eligible for a prorated refund if you pay off the loan early or cancel the product—rules vary by contract and state.

Start by checking your GAP paperwork for the administrator’s cancellation instructions. If your financing is through CarMax Auto Finance, their customer service is a good first stop for account-specific questions.

Final Word on CarMax’s GAP Coverage

CarMax GAP coverage can be helpful if you’re likely to be upside down on your loan—especially with a small down payment, long term, high APR, or rolled-in negative equity. But it isn’t automatically “must-have,” and it’s not a substitute for strong collision and comprehensive coverage.

Before you buy, compare the cost and contract terms to GAP options from your auto insurer, ask for the full written agreement, and make sure the coverage matches your real risk in the first few years of your loan.

FAQs on CarMax GAP Insurance