Tesla Model 3 Gap Insurance: Everything You Need to Know

Gap insurance is valuable protection for Tesla Model 3 owners. It pays the difference between what your Model 3 is worth and what you still owe if it’s totaled.

Below we will cover:

  • What is gap insurance for a Tesla Model 3?
  • Is it included with a Tesla Model 3 lease?
  • Where to buy Tesla Model 3 gap insurance
  • How much does it cost?
  • When you need gap insurance for a Model 3
  • Alternatives to gap insurance

Understanding gap coverage helps Tesla owners make the right choices to protect their investment.

What Is Gap Insurance for a Tesla Model 3?

Gap insurance covers the “gap” between the actual cash value (ACV) of your Tesla Model 3 and the remaining loan or lease balance if it’s totaled or stolen.

For example:

  • You owe $40,000 still on your Model 3 loan
  • Your Tesla is totaled in an accident
  • Insurance only pays out the ACV of $30,000

Without gap insurance, you would owe $10,000 extra to the lender. Gap coverage pays this difference so you don’t end up owing.

It provides important protection because cars depreciate quickly. The Model 3 can lose 50% of value in just the first 3 years. This creates a large gap between its worth and remaining auto loan balance.

Is Gap Insurance Included With a Tesla Model 3 Lease?

Yes, gap coverage is automatically included with a Tesla Model 3 lease at no extra cost.

Tesla includes gap insurance with all leased vehicles for the entire lease term. So you don’t need to purchase additional gap coverage when leasing a Model 3.

If you purchase a Model 3, gap insurance is optional and must be added separately to your auto policy or loan/lease. It is not automatically included.

Where To Buy Tesla Model 3 Gap Insurance

If purchasing a Tesla Model 3, you have three main options for gap coverage:

1. Your Auto Insurer

Most major insurance companies like Geico, Allstate, and State Farm offer gap insurance add-on policies. This costs around $5 extra per month added to your regular premium.

2. Tesla Finance

You can add gap coverage through Tesla Finance when purchasing a Model 3. It’s a one-time fee rolled into your loan.

3. Third-Party Providers

Companies like Warranty Solutions let you buy a standalone gap policy for around $300-$500 total.

Going through your car insurance provider is usually the cheapest option. But compare quotes from different sources.

How Much Does Tesla Model 3 Gap Insurance Cost?

Gap insurance for a purchased Tesla Model 3 typically costs:

  • $4 – $8 per month when added to your car insurance policy

  • $300 – $500 one-time when purchased separately from a third-party provider

  • $700 – $900 in total fees if added to your auto loan financing

So you’ll pay the least overall by adding gap coverage to your existing car insurance policy. It just slightly increases your monthly premium.

Buying a separate gap policy costs more upfront but may be the better option if your insurer doesn’t offer gap insurance. Financing gap coverage through Tesla Finance is typically the most expensive option long-term due to interest fees.

When Do You Need Gap Insurance for a Tesla Model 3?

Gap insurance makes the most sense for Tesla Model 3 owners that:

  • Put less than 20% down – You likely owe more than the car is worth

  • Took out long auto loans – Gives more time for the car to depreciate

  • Lease luxury vehicles – Very high depreciation

  • Drive a lot of miles – Quickly reduces trade-in and resale value

  • Live in areas with high accident rates – More likely to get totaled

  • Want maximum protection – Peace of mind in case of total loss

Evaluate your specific situation, but gap insurance provides valuable financial protection for many Tesla Model 3 owners.

Alternatives to Gap Insurance for a Tesla Model 3

While gap coverage is recommended for most buyers, here are a few alternatives:

Put Down a Large Down Payment

Putting 20% or more down on a Tesla Model 3 reduces the risk of being underwater on your loan. But you still may want gap insurance depending on the loan term.

Buy Excess Mileage Protection

This waiver lets you

Does every Tesla need Gap insurance? #tesla #modely #longrange #gapinsurance #4k


Does Tesla insurance include gap insurance?

Yes, Tesla does have gap insurance. Tesla gap insurance can help pay the difference between what you owe on your loan or lease and your vehicle’s actual cash value (ACV) if your car is deemed a total loss.

Is a Tesla Model 3 expensive to insure?

It costs more to insure a Tesla than the average car, depending on the year, make, and model. While the average cost of car insurance is $1,682, Tesla insurance for a Model 3 averages $2,503 yearly, based on Insurance.com’s most recent data. Average rates for other Tesla models are even higher: Tesla Model Y: $2,599.

Is Gap Insurance Pointless?

If there is any time during which you owe more on your car than its current value, gap insurance can be worth the money. If the car is totaled, you won’t have to pay out of pocket to make up the shortfall between the insured value of the car and the amount that you owe a lender.

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