Chris Tepedino is a feature writer that has written extensively about auto insurance for numerous websites. He has a college degree in communication from the University of Tennessee and has experience reporting, researching investigative pieces, and crafting detailed, data-driven features. His works have been featured on CB Blog Nation, Flow Words, Healing Law, WIBW Kansas, and Cinncinati....

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Written by Chris Tepedino
Insurance Feature Writer Chris Tepedino

Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

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Reviewed by Jeffrey Johnson
Insurance Lawyer Jeffrey Johnson

UPDATED: Mar 30, 2022

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The Full Review

  • State Farm doesn’t offer traditional GAP insurance
  • Payoff Protector is State Farm’s form of GAP coverage, but is only available if you have a State Farm loan
  • GAP insurance covers the difference between what you owe on a vehicle and its worth

Though many auto insurance companies offer GAP coverage, State Farm GAP insurance is only available if you have a State Farm car loan. You can also get State Farm Payoff Protector if you don’t have State Farm car insurance.

Lenders typically require GAP coverage on new car loans and leases to protect their investment. GAP insurance pays the difference between what your vehicle is worth and what you still owe.

Drivers can drop GAP coverage once the vehicle is worth more than the loan amount.

Keep reading to learn more about State Farm GAP insurance and other coverage you need.

What is State Farm GAP Insurance?

State Farm is the largest auto insurance company in the country. The company has good insurance reviews and offers various coverage types.

What is GAP insurance for cars, and does State Farm offer it?

Getting auto insurance is a requirement for buying or leasing a new car. In addition, most lenders require Guaranteed Asset Protection — or GAP — coverage with a lease or loan.

While you can get GAP coverage through most insurance companies, State Farm is different. Instead of traditional GAP coverage, State Farm offers Payoff Protector. If your car gets stolen or totaled, Payoff Protector cancels the difference between your loan and the insurance payout.

Traditional GAP coverage is an add-on to your existing auto policy, where your insurer covers your vehicle, no matter where you have a car loan.

State Farm’s Payoff Protector is only available if you have a loan through State Farm Bank, though you can get this coverage if you have auto insurance through another company.

For example, if you buy a car with a State Farm loan and have auto insurance through GEICO, you can still get Payoff Protector coverage. However, if you have State Farm insurance and use another bank for a car loan, you can’t add Payoff Protector.

In the simplest terms, your car loan determines Payoff Protection availability, not your car insurance company.

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How does GAP insurance work?

New cars lose value the moment you drive off the lot. As a result, you owe more than the car is worth from the beginning. That’s where GAP insurance comes in.

What does GAP insurance cover? GAP insurance covers the difference between what you owe and your car’s worth if it gets stolen or totaled. However, GAP doesn’t cover damages or bodily injuries in an accident.

Is GAP insurance worth it? Yes, GAP keeps you from paying substantial out-of-pocket costs if you need to replace your vehicle.

For example, say your car loan is $40,000, but your vehicle is only worth $30,000. GAP insurance pays the $10,000 difference, but you pay that difference yourself if you don’t have GAP coverage.

Payoff Protector works the same as traditional GAP insurance. However, Payoff Protector isn’t add-on coverage since it comes standard on all State Farm Bank auto loans.

Additionally, Payoff Protector may be unavailable if you aren’t up-to-date on your loan payments.

What other auto insurance coverage do you need?

In addition to GAP coverage, lenders typically require full coverage car insurance.

What is full coverage auto insurance? Full coverage consists of liability, collision, comprehensive, and other state-required coverage such as personal injury protection and uninsured/underinsured motorist coverage.

Liability covers property damage and bodily injuries to others if you cause an accident but doesn’t cover your vehicle.

Collision insurance covers damage to your vehicle in an accident. If an accident totals your new car, you need collision and GAP insurance to protect you.

On the other hand, comprehensive covers damage unrelated to an accident, such as fire, theft, vandalism, and acts of nature like floods. So, for example, you need comprehensive and GAP coverage to cover someone stealing your new car.

However, full coverage car insurance is more expensive than liability-only coverage since it offers more protection.

This table shows average auto insurance rates based on coverage from top companies, including State Farm.

Average Annual Auto Insurance Rates Based on Coverage Type
CompanyAverage Annual Rate for Low CoverageAverage Annual Rate for Medium CoverageAverage Annual Rate for High Coverage
American Family$3,368.49$3,544.37$3,416.40
Liberty Mutual$5,805.75$6,058.57$6,356.04
State Farm$3,055.40$3,269.80$3,454.80
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State Farm full coverage car insurance averages $287 a month. However, remember that rates vary by driver. So if you have accidents, tickets, or DUIs, expect those rates to be higher.

How can you save on full coverage auto insurance?

Though more coverage costs more, there are ways to get the cheapest full coverage auto insurance from State Farm or other insurance companies.

First, take advantage of discounts. A variety of factors determine discounts, such as your vehicle and policy. Most drives are eligible for multiple discounts, so bundle them for the most savings.

This table shows auto insurance discounts from State Farm and other top companies. The discount amount is listed if it’s available.

Auto Insurance Discounts By Company
Auto Insurance DiscountsAllstate (%)American Family (%)Farmers (%)GEICO (%)Liberty Mutual (%)Nationwide (%)Progressive (%)State Farm (%)Travelers (%)USAA (%)
Adaptive Cruise ControlN/AN/AN/AN/A5xxN/AN/AN/A
Adaptive HeadlightsN/AN/AxN/A5xxN/AN/AN/A
Anti-Lock Brakesxxx555x5xx
Claim Freexxx26x10x152312
Continuous CoveragexxxxN/AN/AxN/A15N/A
Daytime Running Lightsxxx155xN/Axx
Defensive Driverxxxx105105103
Distant StudentxxxxN/A10xx7x
Driver's Edxxxx10N/A101583
Driving Device/AppxxN/Ax30402050305
Early SigningxxxxN/A8xN/A1012
Electronic Stability ControlxxxN/A5xxN/AN/AN/A
Emergency DeploymentN/AN/AN/A25N/AN/AN/AN/AN/AN/A
Engaged CoupleN/AN/AN/AN/AN/AN/AN/AN/AN/AN/A
Family LegacyN/AxN/AxN/AN/AxN/AN/A10
Family PlanN/AxxN/AN/A25N/AN/AN/AN/A
Farm VehiclexN/AxxN/AN/AN/AN/AN/AN/A
Federal EmployeeN/AN/Ax810N/AN/AN/AN/AN/A
Forward Collision WarningN/AN/AN/AN/A5xxN/AN/AN/A
Full PaymentN/Axxx$5N/AxN/A7.5N/A
Further EducationN/AN/AN/Ax1015N/AN/AxN/A
Good CreditxxN/AN/AN/AxxxN/AN/A
Good Studentxxx1522.510x2583
Green VehiclexN/A5N/A10N/AN/AN/A10N/A
Lane Departure WarningN/AN/AN/AN/AxxxN/AN/AN/A
Life InsurancexN/AN/AN/AN/AxN/AN/AN/AN/A
Low Mileagexxxxxxx30xx
Military GaragingN/AN/AN/AN/AN/AN/AN/AN/AN/A15
Multiple DriversN/AN/AN/AN/AN/AN/AN/AN/AN/AN/A
Multiple Policies1029x102010121713x
Multiple Vehiclesxxx25102010208x
New Customer/New PlanN/AN/AN/AN/AxN/AN/AN/AN/AN/A
New GraduateN/AN/AN/AN/A5N/AN/AN/AN/AN/A
Newer VehiclexN/AxxN/Axx401012
Newly LicensedN/AN/AN/AN/A5N/AN/AN/AN/AN/A
Occasional OperatorN/AN/AN/AN/AN/AN/AN/AN/AN/Ax
On-Time PaymentsxN/AN/AN/AN/AN/AN/AN/A15N/A
Online ShopperN/AN/AN/AN/AN/AN/A7N/AN/AN/A
Paperless DocumentsxxxN/AN/A5$50N/AN/AN/A
Paperless/Auto BillingxxxN/Ax$30x$233
Passive Restraintxxx40x20x40xx
Recent RetireesN/AN/AN/AN/A4N/AN/AN/AN/AN/A
Roadside AssistanceN/AN/AN/AN/AN/AN/AN/AN/AN/AN/A
Safe DriverN/AN/Ax15N/A3531152312
Seat Belt UseN/AN/AN/A15N/AN/AN/AN/AN/AN/A
Senior DriverxN/AxN/AN/AN/AN/AN/AN/Ax
Stable ResidenceN/AN/AN/AN/AN/AxxN/AN/AN/A
Students & AlumniN/AxN/Ax107N/AN/AN/AN/A
Switching ProviderN/AxxN/A10N/AxN/AN/AN/A
Utility VehiclexN/AxxN/AN/AN/AN/AN/AN/A
Vehicle Recoveryxxx153525x5xx
VIN EtchingN/AN/AxN/A5xxN/Axx
Young DriverN/AN/AN/AN/AxN/AxN/AN/A$75
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Next, carefully look at your policy. Drop extra coverage like roadside assistance to lower rates. Raising your deductibles also lowers rates. However, a higher deductible means more out-of-pocket costs if you file a claim.

Finally, shop around for cheap full coverage insurance. Since Payout Protector is available regardless of your insurance company, compare multiple companies to find the best deal if you have a State Farm Bank loan.

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State Farm GAP Insurance: The Bottom Line

State Farm doesn’t offer traditional GAP insurance. Instead, State Farm Bank adds Payoff Protector to its car loans. Drivers with State Farm insurance are ineligible for Payoff Protector unless they have a loan through State Farm Bank.

GAP coverage pays the difference between a car’s value and what you owe. You may pay out-of-pocket for a totaled or stolen car without GAP coverage.

Most lenders require GAP coverage and full coverage auto insurance. So add discounts and adjust your policy to get low full coverage auto insurance rates.

Shop around to find the lowest full coverage rates. Compare multiple companies to find the coverage you need with the lowest rates.