Does USAA Offer Gap Insurance On Vehicle Loans? (All You Need To Know!)

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USAA does not offer gap insurance on vehicle loans, and some may find this strange because seven out of the top ten insurance companies offer gap insurance. 

However, USAA has an offer similar to gap insurance called Total Loss Protection. Note that TLP is only available to individuals who obtain their auto loans through USAA. 

What Is Gap Insurance? 

What Is Gap Insurance

Gap insurance, also called lease/loan gap coverage, is additional insurance coverage that covers the amount left on your auto loan if your vehicle is totaled or stolen. 

In essence, they pay off the gap between the depreciated amount of your car and the still owed on the vehicle. This coverage is only available to the original loan or leaseholders on a new vehicle. 

How Does Gap Insurance Work? 

Well, explain how gap insurance works using a simple scenario. Let’s assume you’ve just bought a brand new car worth $30,000. You’ve paid up to $25,000 and still owe $5000 when your vehicle is totaled or stolen. 

When this event occurred, your vehicle’s depreciated value was $20,000. With your collision or comprehensive policy, your vehicle will be paid for up to its depreciated value (the $20,000) 

But you paid $25,000, so what happens to the additional $5,000? If you have gap insurance, the company will cover the remaining $5,000 (the gap between your car’s depreciated value and what you owe on it) 

If you don’t have gap insurance, you will pay for the $5,000 out of pocket. 

When Will I Need Gap Insurance? 

When you’re in the process of leasing or financing a new car, many companies will require you to have collision coverage and comprehensive coverage on the vehicle until it is fully paid off. 

Gap insurance is meant to be used with comprehensive and collision insurance policies. With your claim, your insurance policy will cover the amount on your vehicle up to its depreciated amount if it is totaled or stolen. 

The Insurance Information Institute (III) opines that once a new car is driven out of the parking lot it immediately decreases in value. Many vehicles will reduce their value by up to 20% in their first year of purchase. 

If the amount you still owe on your vehicle is more than its depreciated value, gap insurance can be handy. 

USAA’s Total Loss Protection 

In the event of a car accident, if you have the right coverage, you are hopeful that your insurance company will repay you, I.e., they would restore your vehicle to its Pre crash state. But this isn’t always the case. 

Sometimes your car is declared a total loss, and there is no way it could be repaired. Usually, this is the case if the cost of repairing the car is more than what the car is worth. 

With USAA’s Total Loss Protection, they are essentially buying your wrecked car off you. It can be an overwhelming experience when your car is totaled, but USAA has tried to make the process of reimbursement as seamless as possible. 

In the next section, we explain what to expect once your vehicle has been totaled and how to make a claim on total loss protection. 

How To Make A Claim On Total Loss Protection 

Having your car totaled by your insurance company implies that your vehicle won’t be repaired and returned to you. Rather you will pay the actual cash value for your car after your applicable deductible has been deducted. 

To get started on the procedure, you would need to submit some documents: 

• Vehicle Bill of Sale 

• Odometer Statement 

• Certificate of Title 

• Power of Attorney 

The bill of sale or vehicle sale receipt is used to determine the amount you would be paid out on your claim. With the certificate of the title, you can hand over possession of the vehicle from yourself to your insurance company. 

A power of attorney document isn’t a compulsorily submitted document. In essence, if you don’t mind mediating between the DMV and your insurance company when any hiccups arise in the title transfer process. 

Ordinarily, many people prefer to submit a power of attorney alongside documents, so they don’t have to worry about any legal issues in between. 

Frequently Asked Questions 

How Does USAA Compute a Price for my Vehicle? 

USAA will determine your car’s actual cash value judging by the car’s Pre-crash state and the market price of similar vehicles in your location. 

It would be best if you discuss your insurer’s procedure for computing the actual cash value for vehicles so you can confirm they are using the right models for comparison when determining the price of your car. 

Also, note you have to inform your insurer if you have had any major work done on your vehicle, as this should impact the actual cash value of your vehicle. 

Can I Keep My Totaled Car? 

Not all states permit you to keep your wrecked vehicle after an accident, but when given the option, some people will choose to retain possession of the wrecked vehicle. 

This may be because the car has sentimental value to the owner or because they are experienced in the repairing of vehicles. It could also be because they are experienced in reselling used car parts.

Remember that retaining a wrecked car comes with a branded or salvaged title. This title makes it difficult for you to resell the car or reinsure it in the future. 

What Do I Do With My Car Insurance After my Car Is Totaled? 

After your car has been totaled and handed over to the insurance company, you should take your vehicle off your insurance policy. Usually, your company will do it automatically, but if they don’t ask them to. 

If that was the only vehicle on your policy, ask your insurance company to leave the policy in force, this way, you are still covered when driving other vehicles before your car is replaced. 

In a situation where you don’t intend to replace the vehicle, consider getting a named non-owners policy. 


USSA does not offer gap insurance but rather they offer Total Loss Protection, a policy with the same features as gap insurance. 

If your car is totaled USSA will pay for the wrecked or stolen vehicle using the agreed actual cash value. 

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