Skip to Content
Free Initial Consultation 855-524-2976

Texas Gap Insurance

We've got the experience and track record of taking cases all the way to the finish line.

Gap insurance is an optional car insurance coverage that helps pay off your auto loan if your car is totaled or stolen and you owe more than the car's depreciated value. Gap insurance is also called "loan/lease gap coverage." This type of coverage is only available if you're the original loan or leaseholder on a new vehicle. Gap insurance helps pay the gap between the depreciated value of your car and what you still owe on the car at the time the car is totaled or stolen.

How Does Gap Insurance Work in Texas?

Gap insurance isn't required in Texas.  When you buy or lease a new car, the car depreciates in value quickly over the first few years, meaning the amount of money you owe on the vehicle is often greater than its value. In fact, your new car depreciates and is worth less the moment you drive it off the dealer’s lot.  If your car is then totaled in an accident, or stolen, the amount of money you would receive from the insurer would only equal the vehicle's actual cash value at the time of the incident. Gap insurance covers the difference, or “gap,” between what you owe on the car and its actual cash value, so you won't have to make payments for a vehicle you no longer possess. Therefore, gap insurance coverage is a great thing to have if you purchase a new car but is not generally worth it if your car is several years old, or if you bought it used.

Texas Gap Insurance Laws

Gap insurance is not required in the state of Texas, and it can't be required as a condition of receiving an auto loan or lease. If you choose to purchase a gap waiver, Texas law limits the cost of coverage to 5% of the loan amount, assuming you purchased the car, per the retail installment contract. Similarly, if you leased your car, a gap waiver can only cost up to 5% of the adjusted capitalized cost specified in your lease. 

Share To:


we will take care of everything related to your claim
  • Please enter your first name.
  • Please enter your last name.
  • Please enter your phone number.
    This isn't a valid phone number.
  • Please enter your email address.
    This isn't a valid email address.
  • Please make a selection.
  • Please enter a message.
  • By submitting, you agree to be contacted about your request & other information using automated technology. Message frequency varies. Msg & data rates may apply. Text STOP to cancel. Acceptable Use Policy
  • Spanish Services Available
    Work with a personal injury attorney who speaks your language.
  • Experience
    With over 20 years of experience in a wide range of personal injury and wrongful death cases, Paradowski Law is available to help individuals and families obtain the maximum amount of compensation possible in their cases.
  • Local
    We are a Texas law firm conveniently located in the heart of College Station, close to local courthouses and public transportation, serving Bryan/College Station, Central Texas, Houston, and Austin as a Personal Injury Attorney.
  • No Win, No Fee

    As a firm, we understand the importance of providing clients with professional, understanding, and accessible legal representation, and we are available to our clients’ immediate inquiries. We operate on a contingency fee basis, and we are ready to help clients receive the quality legal representation they deserve.

  • Board-Certified
    Jeff Paradowski is Board Certified, Personal Injury Trial Law - Texas Board of Legal Specialization. We can handle complex disputes involving insurance companies and various involved parties.