Gap insurance isn’t included in Hawaii’s legal minimum required car insurance, but it’s a good choice for some drivers who finance or lease their vehicles—and many lenders require it.

If you need gap insurance for your new car in the Aloha State, you have a few different options. Your lender, the dealership where you’re buying your car, and your insurance company can all provide you with this optional coverage. Adding

gap insurance

onto your regular

car insurance

policy is the cheapest option, but your provider may or may not offer it. Read on to learn what you need to know about getting gap insurance in Hawaii.

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The best gap insurance companies in Hawaii

One potential snag that you might come across is that many major car insurance providers don’t offer gap insurance. Neither

GEICO

nor

Farmers

offer gap insurance, but

Progressive

and

Nationwide

do.

State Farm

provides a type of gap insurance, but only to customers who finance their car loans through them.

This means that gap insurance depends on your current insurance provider. You may need to switch car insurance companies in order to get a gap insurance policy added to your

full-coverage insurance

policy.

Take a look at the table below to see some average monthly rates for some of the providers who do offer gap insurance in Hawaii.

[table]

Getting quotes from at least three to five different providers is a smart way to make sure you’re getting the best deal on your insurance coverage in Hawaii—or anywhere!

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How does gap insurance work in Hawaii?

Gap insurance (aka guaranteed asset protection or guaranteed auto protection) works the same no matter what state you’re in. If you leased or financed your vehicle, gap insurance covers the difference between your

car loan

balance and your car’s actual cash value (

ACV

To add gap insurance to your policy, you’ll first need to have both

comprehensive

and

collision insurance

. In some cases, a lender might require it as a condition of the loan. But once your loan is paid off (or your car no longer has negative equity), then you’ll no longer need it.

The criteria for gap insurance varies depending on who is offering it, but here are some of the more common stipulations:

The vehicle is less than two or three years old

The vehicle has no prior damage

You’re the first owner of the vehicle

The vehicle is within the mileage and value limits of the insurer

Some companies will provide gap insurance to a second owner under some circumstances, but some won’t. Shopping around allows you to find the provider that works best for you!

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What does gap insurance cover?

Unfortunately, there are a few downsides to buying a new car. That new car smell also comes with a steep rate of depreciation. Your new ride can lose as much as 5% of its value the second you drive it off the lot and up to 20% of its value in its first two years—with some cars losing that much in as little as 12 months!

So, if your car gets totaled during the early years of your ownership, it’s possible that it might be worth less money than what you owe on it.

For example, let’s say you take out a $55,000 loan for the

BMW 430i

of your dreams. You’re cruising across the Big Island with the top down and loving life—until a distracted tourist crosses the center line and causes an accident. You’re okay, but your Bimmer? Toast. To make matters worse, the insurance company says it’s only valued at $45,000—and you still owe $52,000 on it.

Without gap insurance, you would have to pay the $7,000 difference between your insurance payout and your loan balance—and you’d still need to replace your car. Ouch. But if you have gap insurance, it makes up the difference—and in some cases even pays your

deductible

. Thanks, gap insurance!

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When your car is totaled and you don’t have gap insurance

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Average monthly cost of gap insurance in Hawaii

Like every other kind of insurance, the cost of gap insurance depends on a lot of different factors—your demographic, vehicle, and location all come into play. There’s a big range when it comes to cost estimates, from about $2 to $80 a month.

One thing that’s certain, though, buying gap insurance from a dealership is generally the most expensive option, especially if you roll it in as part of your loan and pay interest on top of it.

MORE:

How to cancel gap insurance and get a refund

Is gap insurance worth it in Hawaii?

Not all drivers need gap insurance in Hawaii—but for some drivers, it’s an exceedingly wise choice.

You should consider gap insurance if you:

Made a down payment of less than 20%

Are purchasing a car with a high depreciation rate, like a

BMW

or a

Land Rover

Put more than 15,000 miles a year on your vehicle

Have a loan term of more than 60 months

Have negative equity from an earlier car loan

Gap insurance through your preferred insurance company won’t increase your premium by much, and it offers you great financial protection if your vehicle is totaled when it’s new. Plus, you can easily cancel it when it’s no longer needed. Mind the gap!

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had a super simple app that was easy to navigate. And their terrific customer service made everything even easier. Plus I saved $700 in a single year.” —Lucia M.

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