Not exactly. Progressive doesn’t sell traditional gap insurance, but it offers a similar coverage called loan/lease payoff. If your financed or leased car is totaled or stolen, loan/lease payoff pays the difference between the car’s value and what you still owe, up to 25% of the car’s value. Progressive notes that the exact limit can vary by state.
That cap is the key difference from many gap products. If you owe a lot more than your car is worth, loan/lease payoff may not cover the whole shortfall.
Key Takeaways
- Progressive offers loan/lease payoff instead of gap insurance. After a total loss, it pays the gap between your car’s value and your loan or lease balance.
- The payout is capped at a percentage of the car’s actual cash value, which Progressive lists as 25%. The limit can vary by state.
- You need both comprehensive and collision on the car to add it.
- It won’t pay extra charges on your loan or lease, such as excess mileage fees or past-due payments, so check how much of your balance it would actually cover.
How Progressive’s Loan/Lease Payoff Works
Progressive’s loan/lease payoff page is direct about it: “At Progressive, only loan/lease payoff coverage is offered.” The coverage pays “the difference between your vehicle’s value and what you owe on it, up to 25% of your vehicle’s value (though the exact limit can vary by state).”
It only comes into play when your car is a total loss, and the loss has to be covered by your comprehensive or collision coverage. Your regular claim pays the car’s actual cash value, and loan/lease payoff adds money toward the remaining balance, up to its cap.
An Example of the 25% Cap
Say your car is worth $20,000 when it’s totaled, and you still owe $27,000 on the loan. That’s a $7,000 shortfall. With a 25% cap, loan/lease payoff pays at most $5,000, or 25% of $20,000. You’d still be responsible for at least the remaining $2,000. This is a simplified example. Deductibles and any charges the coverage excludes can change the numbers.
| Amount | |
|---|---|
| Car’s actual cash value | $20,000 |
| Loan balance | $27,000 |
| Shortfall | $7,000 |
| Loan/lease payoff maximum (25% of $20,000) | $5,000 |
| Left for you to pay | At least $2,000 |
What Loan/Lease Payoff Doesn’t Cover
Progressive says the coverage “doesn’t cover additional charges related to your loan or lease, such as excess mileage fees.” A Progressive policy form filed in Nevada lists more exclusions, including unpaid finance charges, excess mileage and wear-and-tear charges, extended warranties and credit insurance rolled into the loan, past-due payments, and collection or repossession costs.
Those exclusions matter if you rolled extras or old debt into your loan. They can make up a big part of the balance, and they’d stay your responsibility.
Loan/Lease Payoff vs. Gap Insurance
| Progressive loan/lease payoff | Typical gap insurance | |
|---|---|---|
| What it pays | The difference between the car’s value and your balance, up to 25% of the car’s value | Usually aims to cover the difference, though many products have their own limits |
| Where you buy it | Added to your Progressive auto policy | From an insurer, a dealer or a lender |
| Requirements | Comprehensive and collision on the car | Varies by product |
| When it pays | After a covered total loss or theft | After a covered total loss or theft |
Progressive’s gap insurance guide sums up the difference: “the loan or lease payoff coverage is limited to no more than 25 percent of your vehicle’s value.” RateFrog’s guides to how much gap insurance will pay and why gap insurance might not pay explain the limits of other products.
Is Loan/Lease Payoff Worth Adding?
It’s most useful early in a loan or lease, when you’re most likely to owe more than the car is worth. That’s common if you made a small down payment, chose a long loan or rolled negative equity from a previous car into the new loan. Progressive’s guide to buying gap coverage also notes that when you buy it through your insurer, “you won’t pay interest on your coverage,” unlike gap coverage financed into a car loan.
Once your balance falls below the car’s value, the coverage stops doing much. Progressive says you “can typically drop gap coverage once it’s no longer needed.” If your shortfall would be larger than 25% of the car’s value, compare a full gap product too. RateFrog’s guide to whether gap insurance is worth it walks through that decision.
Frequently Asked Questions
Is Loan/Lease Payoff Required?
Not by law. Progressive says, “Loan/lease payoff isn’t legally required by any state.” Your lender or leasing company may have its own requirements, so check your contract.
Can I Add Loan/Lease Payoff to a Used Car?
Progressive doesn’t publish vehicle-age rules for loan/lease payoff on its website. Its general guidance says gap-style coverage can typically be added to a new or used car as long as the loan or lease isn’t paid off, but ask Progressive about your specific car.
How Do I Remove Loan/Lease Payoff From My Progressive Policy?
Progressive says you can typically call or go online to remove it once you no longer need it, such as when your balance drops below the car’s value.
What About Gap Coverage at GEICO?
Each insurer handles this differently. For GEICO’s options, see RateFrog’s article on whether GEICO offers gap insurance.