Does State Farm Sell Gap Insurance?

Last Updated on September 20, 2023

Gap insurance can help you save thousands on a total loss insurance claim. State Farm, however, is one of several major insurers that does not offer gap insurance.

State Farm insures more vehicles than any other company in the United States. Although the company provides a range of insurance products, gap insurance is not one of those products.

Keep reading to find out why State Farm doesn’t sell gap insurance – and what your options may be as a State Farm policyholder.

No, State Farm Does Not Sell Gap Insurance

State Farm does not sell gap insurance. If you are a State Farm policyholder, then you cannot add gap insurance to your car insurance policy.

Normally, gap insurance would cover the difference in value – or the gap – between your vehicle’s value and the amount you owe the lender.

Although State Farm does not offer gap insurance, you may have gap insurance through your lease or financing agreement. Some agreements have gap insurance built in. Alternatively, you can buy gap insurance through your dealership, another car insurance company, or a third-party gap insurance specialist.

State Farm Bank Offers Payoff Protector, and It’s Similar to Gap Insurance

State Farm offers insurance services and banking services.

Although State Farm does not offer gap insurance as an insurance product, State Farm Bank offers a similar program called Payoff Protector.

In fact, all vehicle loans from State Farm Bank include Payoff Protector, which functions similarly to gap insurance. If you borrowed money from State Farm Bank to buy your vehicle, then you may already have gap insurance.

Here’s how State Farm Bank’s Payoff Protector works:

  • Every vehicle loan originated from State Farm Bank includes Payoff Protector.
  • Payoff Protector may cover the “gap” between the value of your vehicle and the amount remaining on your vehicle loan if your car is totaled or stolen, assuming the total insurance settlement does not cover the remaining balance of your loan.
  • Without State Farm Bank’s Payoff Protector, you would normally need to pay the gap between the value of your vehicle and the amount remaining on your loan. That could mean paying thousands of extra dollars out of pocket.

State Farm Bank’s Payoff Protector covers all insured vehicles that are financed by and collateral for a vehicle loan originated with State Farm Bank. If State Farm Bank was your lender, then your loan should have Payoff Protector.

How to Get Gap Insurance as a State Farm Policyholder

So you have State Farm insurance, and you want gap insurance. Because State Farm doesn’t offer gap insurance, you need to turn to other options.

Other ways to get gap insurance as a State Farm policyholder include:

  • Get your vehicle loan through State Farm Bank. As mentioned above, all vehicle loans originated with State Farm bank include Payoff Protector. Although Payoff Protector is not an insurance product, it works similarly to gap insurance and covers the difference in value between your vehicle and the amount remaining on your loan or lease.
  • Buy gap insurance from your dealership or lender. Many dealerships offer gap insurance. You pay an extra amount of money on your loan or lease each month to obtain gap insurance coverage.
  • Buy gap insurance from a standalone third-party gap insurance provider. Some insurance companies or lenders specialize in selling gap insurance. Your dealership may recommend a provider. Or, you can find one on your own.
  • Check your car loan paperwork to verify you don’t already have gap insurance. Some leases and financing agreements automatically include gap insurance. You don’t want to pay for gap insurance twice.

Buying gap insurance from the dealership tends to be the most expensive option. However, it may be the most convenient option as a State Farm policyholder.

Final Word – State Farm Gap Coverage

State Farm, like GEICO and certain other large insurance companies, does not offer gap insurance. You cannot add gap insurance to your State Farm policy.

Instead, you can buy gap insurance through a third-party insurance provider, your lender, or your dealership. In fact, State Farm Bank automatically includes Payoff Protection (a banking product similar to gap insurance) on all vehicle loans.

James Shaffer
James Shaffer James Shaffer is a writer for and a well-seasoned auto insurance industry veteran. He has a deep knowledge of insurance rules and regulations and is passionate about helping drivers save money on auto insurance. He is responsible for researching and writing about anything auto insurance-related. He holds a bachelor's degree from Bentley University and his work has been quoted by NBC News, CNN, and The Washington Post.
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