What Is Gap Insurance for Truckers?
Commercial Truck Gap Insurance, or Gap Insurance, is sometimes referred to as Financed Value Coverage or Lease Value Coverage.
Whatever name you call it, the coverage can be a real lifesaver for Owner Operators. If your truck gets totaled, it helps cover the gap between what you owe on your loan and what your truck is actually worth.
Why Is Gap Insurance Important For So Many Small Truckers?
The moment you drive off the lot, your truck starts losing value—it’s just how it goes.
If you’re financing or leasing with a small down payment or a long loan term, you might end up with an upside-down loan. That’s when you owe more on your truck than it’s actually worth.
For many owner-operators and small motor carriers, losing your truck in a total loss isn’t just a hassle—it could mean losing your livelihood. Gap or Financed Value Coverage Insurance has your back, so you’re not stuck paying for a truck you can no longer use.
How Does Gap Insurance Work?
Say your truck is stolen or totaled in an incident covered by Collision or Comprehensive insurance. Your insurance company will reimburse you based on your vehicle’s Actual Cash Value (ACV)—its market value just before the loss. Gap Insurance then pays the difference between what you owe on your truck loan or lease and the ACV of your truck.
Financed Value Coverage requires you to choose a Stated Amount for your truck, usually what you owe on your loan or lease. The insurance company will then pay you either the Actual Cash Value or the amount left on your loan—whichever is higher—up to the Stated Amount.
In both cases, you are still responsible for the deductible you choose on Comp and Collision.
Example:
Suppose you owe $75,000 on your truck and that is the Stated Amount on your policy. But your truck’s depreciated Actual Cash Value is only $60,000 when it’s totaled. Financed Value Coverage is insurance that would cover the $15,000 difference (minus your deductible).
Is Theft Covered by Gap or Financed Value Insurance?
Yes, Gap and Financed Value insurance will pay if your truck is stolen.
First, your Comprehensive Insurance deductible kicks in, then your insurance company pays for the theft claim. That’s when your Gap or Financed Value insurance would pay the balance of your loan or lease—usually up to your Stated Amount.
Is Mechanical Failure Covered by Gap or Financed Value Insurance?
No. Gap insurance doesn’t cover mechanical failure of any type.
It only pays out after a total loss first covered by your Collision or Comprehensive Insurance. For example, your truck would need to be totaled in an accident or stolen first.
Is Death or Injury Covered by Gap or Financed Value Insurance?
No, Gap and Financed Value Insurance coverage strictly pays out based on the total loss of the truck itself.
It does not cover injuries, death, or funeral costs. Liability coverage on your primary truck insurance protects you in the event of accidental death or injury to another person.
Learn more at What is Commercial Trucking Liability Insurance.
Does Gap or Financed Value Insurance Help Cover Your Deductible?
Gap or Financed Value Insurance from a trucking insurance company typically won’t cover your Collision or Comprehensive deductible.
Some Dealership Gap Policies might cover your deductible, and the cost can either be added to your payments or paid upfront. These policies are usually more expensive than what trucking insurance companies offer. However, they could be your best bet if your insurer doesn’t offer Financed Value Insurance.
Is Gap Insurance Right for You?
- If you’re in the early years of a five-year loan and owe more than your truck’s actual value
- If your lease requires Lease or Financed Value coverage
- If you made a small down payment on your truck
- If you chose a longer financing term
Most truck owners can remove their Gap, Lease, or Financed Value coverage once their loan or lease balance matches what the truck is actually worth.
If you’re a new truck owner, it’s a smart idea to check this every year—used truck values can shift a lot depending on the market.
How Much Does Gap or Financed Value Insurance Cost?
The cost of Gap Coverage for trucks depends on whether you purchase it through a dealership or an insurance provider. Sometimes it also depends on the value of your vehicle.
When choosing coverage through your dealership, avoid unexpected costs by requesting a detailed breakdown before it’s included in your loan. If it’s through your insurance company, see how it impacts your premium and payments.
For instance, some insurers charge approximately 5% of your Physical Damage premium for Gap Coverage. Some insurance providers even include Gap Coverage directly within their policies. A great Trucking Insurance Broker can hook you up with an insurance policy that already includes Financed Value Gap Coverage—often at no extra cost.
Remember—Gap Insurance for your truck has your back when you’re upside-down. It covers the difference between what you owe on your truck and what it’s actually worth. Learn more at Commercial Truck Insurance 101.
About the Author: Shelly Benisch
2002 Founder of Commercial Insurance Solutions, Inc., Shelly Benisch specializes in providing Commercial Truck Insurance for owner operators and small motor carriers. Both CIC and TRS certified, She also writes a free educational trucking insurance advice blog dedicated to the little guy.