SoFi

Gap insurance is additional coverage drivers can purchase to pay off their auto loan after their primary coverage pays out for a totaled or stolen vehicle. Gap insurance is beneficial when a car’s depreciated value isn’t as high as the loan balance.

Gap coverage can be helpful and cost effective, but it isn’t always worth it. We’ll discuss how gap insurance works, pros and cons, and what it doesn’t cover.

What Is Gap Insurance?

Not everyone is familiar with gap insurance, since this car insurance term is only relevant to buyers of brand-new cars. It refers to coverage from an insurance agency or car dealership that will pay your outstanding loan or lease balance when your car is totaled or stolen and you owe more than the car’s value.

Your insurance policy or lender might describe gap insurance as loan/lease gap coverage. Gap coverage is accessible only to the original owner of a new car or the leaseholder of a new vehicle. Although it is not required, many car owners who conduct personal insurance planning believe it’s worth the minimal extra cost.

Recommended: How to Save on Car Maintenance Costs

Who Needs Gap Coverage

A new vehicle will depreciate 40% in five years on average. Some cars depreciate more than others, with luxury vehicles and SUVs taking the biggest hit. As a result, during your first five years of car ownership, your car’s value can plummet while your loan balance remains well above your vehicle’s worth.

How much car insurance you need is often based on your comfort level and financial situation. Gap insurance, however, is particularly advantageous if you make a minimal down payment, since your loan amount will be higher. A car loan can take five years or more to pay off. The timeframe of the loan increases the chances of losing the car to an accident or theft, leaving you with an insurance payout based on massive depreciation.

Leasing a car presents a similar problem. Your insurance will cover only the car’s depreciated value. In case of loss, gap insurance can cover any additional amount you owe on the lease. Some lenders may require that drivers purchase gap insurance to obtain financing.

How Does Gap Insurance Work?

How car insurance works isn’t always intuitive. Let’s say you buy a new car for $35,000. You pay $5,000 down and take out a loan for the remaining $30,000. A few years later your car is stolen, and you file an insurance claim. Your car is worth $20,000, but you still owe $25,000 on the car loan. After your policy’s $500 deductible, your insurance pays out $19,500.

At this point, you still owe your lender $5,500 for the auto loan. This is where gap insurance comes in. The policy pays your lender the remaining amount due, and the debt is gone.

How Gap Insurance Works After a Car Is Totaled

In another example, an accident totals your car. A vehicle is “totaled” when needed repairs cost more than the vehicle is worth. Your insurance company provides a payout for the car’s current value.

As in the case of theft, your insurance will send a payout minus the deductible (learn about the types of deductibles in insurance). But you’re still on the hook for the remainder of your car loan. Gap coverage relieves you of that responsibility, potentially saving you thousands.

Recommended: How Much Does Insurance Go Up After An Accident?

Pros and Cons of Gap Insurance

Gap insurance offers a number of benefits:

•   Coverage to satisfy your auto loan in full in the event of theft or totaling the vehicle.

•   Inexpensive pricing when purchased from most insurance companies.

•   Protects you if you can only afford a small down payment on a new vehicle.

•   Especially helpful with cars that rapidly depreciate.

However, gap insurance also has several drawbacks:

•   Unusable if you don’t total your vehicle or lose it to theft.

•   Increases your insurance premium.

•   Less helpful if you put down a significant amount on your purchase, shrinking your loan amount.

•   Doesn’t make as much sense if you rarely drive.

How to Choose the Right Gap Insurance

Most car dealerships sell gap insurance, but you’ll pay far less if your car insurance company adds gap coverage to your policy. Your gap insurance and comprehensive coverage usually will come from the same company. You can’t split the policies between two companies.

Before purchasing comprehensive coverage for a new vehicle, ask the insurance company if it provides gap insurance. Some companies, like Geico and Farmers, don’t offer it.

Gap coverage from an insurance company costs about $60 annually. At a car dealership, you can pay up to $600 for a similar policy. Although you can add that cost to your auto loan, you’ll increase the interest you’ll pay. Plus, you may not have the option to cancel your gap insurance later if you don’t need it.

The company you choose and the level of coverage you need will affect the price of your gap insurance.

When to Cancel Your Gap Coverage

Once you pay off your auto loan, there’s no reason to keep your gap coverage, as you won’t owe your lender anything if you total your car. However, if you’re still midway through paying off your loan, canceling gap coverage might still make sense.

For example, we’ll assume you have $5,000 remaining on your loan. You look up your car’s estimated value on Kelley Blue Book and discover that your car is worth about $4,500. It may make sense to drop your gap insurance and risk the minor $500 financial hit if the car is totaled or stolen.

Selling or exchanging your car is another reason to cancel your gap insurance. It’s wise to make sure your insurance covers your car until the day you sell it. Otherwise, an accident could cost you thousands.

If you do cancel your gap coverage, you may qualify for a partial refund. For instance, when you pay off your loan early and the gap coverage was included in the loan, you can possibly request a refund of any prepaid premiums.

What Gap Insurance Doesn’t Cover

Gap insurance can be a tremendous help in certain situations, but there are expenses that the policy won’t cover:

•   Your comprehensive policy deductible

•   Down payment for a vehicle

•   Extended warranties

•   Late payments and related fees on your auto loan or lease

•   Security deposits

•   Lease penalties

•   Carry-over amounts from prior loans or leases

•   Credit insurance charges for your auto loan

How to Save Money on Gap Insurance

​​Gap insurance policies are usually affordable when purchased from a traditional or online insurance company. But you can offset the extra cost by following these steps:

•   Shop around. Remember, your comprehensive, collision, and gap coverage usually come from the same company, but not all insurance companies offer gap coverage. Ask about gap coverage availability and pricing before picking a policy.

•   Look into discounts. You may be eligible for reduced rates if your projected mileage is low or you have a safe driving record. Learn more about how to lower your car insurance.

•   Sign up for voluntary tracking. Your insurance company may offer a lower rate if you allow them to install a tracking device in your car. You’ll have extra incentive to drive sensibly if you’re saving money.

•   Pay annually or biannually. Monthly payments for auto insurance often cost slightly more. If you can cover the annual bill up front, you’ll reduce the total amount paid.

Is It Worth Getting Gap Coverage?

Because gap coverage is typically inexpensive, it’s often worth purchasing for a new vehicle. For a few dollars a month, it can save you potentially thousands in the event of a bad accident or theft. Plus, if you’re new to the road, purchasing gap coverage is one of the crucial insurance tips for first time drivers.

However, the lower your loan balance, the less valuable gap coverage becomes. Over the years, the gap between your loan balance and car’s value can close, and gap coverage will be of little value.

The Takeaway

Anyone purchasing or leasing a brand-new car will likely find gap coverage worthwhile, especially if you paid a low down payment. New vehicles depreciate rapidly in the first few years of ownership, potentially leaving the owner with a loan balance that’s higher than the vehicle is worth after an accident or theft. Yet auto insurance pays out only the vehicle’s market value. With an average monthly cost of a few dollars, gap coverage can save drivers thousands. You can cancel gap coverage when you no longer need it.

When you’re ready to shop for auto insurance, SoFi can help. Our online auto insurance comparison tool lets you see quotes from a network of top insurance providers within minutes, saving you time and hassle.

FAQ

Does gap insurance give you money?

Gap insurance pays off your car loan after your main coverage pays you the actual value of your totaled or stolen vehicle. That’s important because depreciation can result in a loan balance that’s higher than the vehicle’s value.

Do you need car gap insurance if you have full coverage?

Full auto coverage will pay out your car’s actual market value. However, since your loan balance may be higher than your car’s value, especially in your first few years of ownership, gap insurance is extremely useful in addition to full coverage.

How long does it take to get a gap insurance refund?

After canceling gap coverage, your insurance company will send you a prorated refund in four to six weeks.

Photo credit: iStock/ollo

Auto Insurance: Must have a valid driver’s license. Not available in all states.
Home and Renters Insurance: Insurance not available in all states.
Experian is a registered trademark of Experian.
SoFi Insurance Agency, LLC. (“”SoFi””) is compensated by Experian for each customer who purchases a policy through the SoFi-Experian partnership.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

SOPRO-Q324-003

Flat tires are one of the top reasons motorists call roadside assistance. Even when you know how to change a tire yourself, calling roadside assistance can be a good move. If you’re stuck on a dark or busy road or you have kids in the car, roadside assistance is safe and fast.

Roadside assistance plans are available from your car insurance provider, car rental companies, and other sources. We’ll explain how roadside assistance works, how much it costs for them to change a tire, and what else the service covers.

What Is Roadside Assistance?

Roadside assistance coverage is designed to help motorists experiencing a range of problems, from a dead battery to an overheated engine. You can call a toll-free number or use an app to contact your provider, and a dispatcher will send a qualified technician to your location. Depending on what services you require, your plan may pay all or some of the costs involved in getting your car back on the road.

You may be able to get roadside assistance coverage as part of your auto insurance policy. There also are auto clubs that sell subscription plans, or you may have a plan through your car warranty, credit card, car rental company, or another source.

If you’re one of many people who sit down annually for a personal insurance planning session, discuss this option with your insurer.

Recommended: Car Insurance Terms Explained

What Are the Benefits of Roadside Assistance?

Having a specific point of contact anytime you’re in need is arguably the top benefit of having roadside assistance coverage. This is especially important for first-time drivers. Instead of making multiple calls to find help from a nearby mechanic or garage, you can program your provider’s number into your phone or store it in your glove compartment with other relevant papers. If your provider offers an app, you can take advantage of that convenience.

With one call, you can get useful advice on what to do next. After assessing your situation, the dispatcher will get the appropriate service person out to help you. If your car can’t be fixed onsite, you can get a tow to a repair shop — and that cost may be covered as well.

Some plans offer benefits such as posting bond if you’re charged with a traffic violation or reimbursing you if you’re away from home and have to stay in a hotel overnight. Plans also may provide discounts on car maintenance, car rentals, hotels, and other perks. However, extra benefits may come at an extra cost.

Recommended: How Much Does Insurance Go Up After an Accident?

What Does 24-Hour Roadside Assistance Cover?

All roadside assistance programs are not the same, so it’s important to understand the coverage details and limitations of each plan you may be considering.

A plan may offer free fuel delivery, for example, for drivers who run out of gas — but typically there will be a charge for the gasoline received. Similarly, a plan may offer free lockout assistance, but a driver can expect to be charged if the locksmith has to make a new key. And there is usually a limit on how many miles a car can be towed for free.

Some plans limit the number of service calls you can make in a year. And plans also can have different rules regarding when a driver is or isn’t covered. With some plans, for example, you must be driving your own car when you call for assistance. But some plans will cover you even if you’re the passenger or driver in someone else’s car.

Programs generally include some type of coverage for:

1. Changing a Flat Tire

If you have a usable spare tire, your service provider likely can change a flat or blown tire onsite. If not, they can tow you to someone who can help.

2. Vehicle Towing

If your vehicle can’t be safely repaired or restarted onsite, roadside assistance can tow it to a nearby repair shop.

3. Battery Jump-Start or Replacement

Roadside assistance can give your dead battery a jump-start and, if that doesn’t work, tow you to a repair shop to get a new battery installed.

4. Lockout Assistance

If you’ve locked your keys in your car, roadside assistance can get a locksmith to help. Even if you’ve lost your keys, the service may be able to get you back in your vehicle and back on the road.

5. Winching Service

Your service provider may bring in a winch to extricate your car if it’s stuck in mud, ice, or a ditch.

6. Fuel Delivery

If you run out of gas, your provider can deliver fuel to your location. And if the battery in your electric car needs a charge, you can ask for a tow to the nearest charging station.

7. Quick Fix First-Aid

If you have a minor mechanical problem that can be fixed quickly, it may be possible to do so onsite. If not, the service can tow your car to a nearby repair shop.

Recommended: How to Lower Your Car Insurance

Auto Insurance Companies That Offer Roadside Assistance

Insurance companies that provide roadside assistance typically offer these services as an add-on to an auto policy. If you aren’t sure if you already have roadside protection, contact your agent or log in to your account on your insurer’s website to get information about your coverage. The information may also appear on your insurance card.

If your car is damaged after an accident or in a flood or fire, your auto policy’s collision or comprehensive coverage may apply to your towing costs. But this is not the same as having roadside assistance or “towing and labor” coverage.

Here are a few insurance companies that offer roadside assistance:

Recommended: Does Auto Insurance Roadside Assistance Cover Keys Locked in a Car

Allstate

Allstate offers its 24-hour roadside assistance programs to both policyholders and non-policyholders. Costs and coverage vary based on the plan you choose.

Geico

Geico’s roadside assistance program is available to policyholders as an add-on, and it covers most of the basics other plans offer. The cost is determined by the number of vehicles you want to cover.

Liberty Mutual

To access Liberty Mutual’s 24-hour assistance program, which offers basic roadside services, you must purchase optional towing and labor coverage as an add-on to your policy.

Nationwide

Nationwide offers roadside assistance as an optional add-on for policyholders. The plan covers the same basic services offered by other insurers, but optional features and other program details may vary by state.

Progressive

Emergency roadside assistance for flat tires is available as an optional add-on for Progressive auto insurance policyholders. Progressive’s program covers service basics such as towing, jump-starts, flat tires, and lockout assistance.

State Farm

State Farm’s roadside assistance program is an add-on for policyholders. If you have this coverage and need assistance, State Farm will be billed directly for any basic services you receive, so you may not have to worry about turning in your receipts and waiting to be reimbursed.

How Much Does Roadside Assistance Cost for a Flat Tire?

The cost to get your flat tire fixed may depend on if you have a usable spare tire and other factors. If you have a good spare tire available, the roadside assistance technician may be able to change your tire onsite and get you right back on the road at no charge.

If, for some reason, the tire can’t be changed onsite and your vehicle must be towed to a repair shop, the tow charge will be based on mileage. Many roadside assistance plans will go 15 miles or to the nearest qualified repair shop for free. But if you ask to be towed to a shop that’s farther away, you may have to pay for any extra mileage.

When your car arrives at the repair shop, you can expect to be charged if you need any parts or repairs, or a new tire.

Recommended: How to Get Car Insurance

How Much Does Roadside Assistance Cost Without Insurance

The most inexpensive way to get roadside assistance coverage is usually to have it included as an add-on through your auto insurance policy. Allstate, for example, offers its Roadside Advantage plan membership without an Allstate auto policy starting at $89 for the first year.

If your insurer doesn’t have 24-hour roadside assistance, or if you don’t like the plan your insurer is offering, you may want to check out online insurance companies to see what’s available based on your budget and needs.

How to Change a Flat Tire Yourself

Even if you have roadside assistance coverage, it can be a good idea to know how to fix a flat tire — just in case you forget your phone or can’t get cell service when you run into trouble.

If no one ever taught you how to change a tire, you might want to practice sometime when you’re in a safe place and you’re not in a hurry or wearing nice clothes. There are plenty of YouTube videos on the topic, or you can ask someone who knows their way around a car for a demonstration.

Here are a few tire-changing basics:

1. Drive Prepared

Make sure your spare is in good shape and your jack, lug wrench, and owner’s manual are always in your car. You might want to keep rain gear, work gloves, a flashlight, and wheel wedges in your trunk as well.

2. Safety First

If you suspect your tire is flat, turn on your hazard lights and pull off to the side of the road — as far as you can. Once you’ve stopped, you can put on your parking brake and get out to inspect your car. If you do indeed have a flat, secure your tires with wheel wedges or a couple of large stones.

To change a rear tire, place the wedges behind the front tires. To change a front tire, place the wedges behind the rear tires.

3. Remove the Hubcap/Wheel Cover

Consult your owner’s manual for instructions on removing the hubcap or wheel cover.

4. Loosen the Lug Nuts

Turn the lug nuts counterclockwise with your lug wrench. (Getting them started may require some effort!) Loosen the lug nuts about a quarter- to half-turn, but don’t take them off completely.

5. Put the Jack in Place

Check your owner’s manual for specific placement instructions.

6. Use the Jack to Raise the Vehicle

Carefully raise your car until the flat tire is about 6 inches above the ground.

7. Unscrew the Lug Nuts and Take off the Tire

Remove the lug nuts completely and put them in a safe place (a cup, envelope, hat, purse, etc.). Pull the flat tire toward you until it comes free and place it on the ground on its side.

8. Put on the Spare

Grab the spare tire and place it on the hub by lining up the rim with the lug bolts. Push gently until you can see the lug bolts through the rim.

9. Put the Lug Nuts Back in Place

Put the lug nuts back on the lug bolts and tighten them by hand.

10. Lower the Car and Tighten the Lug Nuts Again (and Again)

Lower the vehicle until the tire is touching the ground, but don’t let it down all the way yet. Tighten the lug nuts with the wrench, as tight as you possibly can, then lower the car all the way to the ground and remove the jack. Tighten each lug nut again with the wrench to be sure they’re all as secure as possible. Replace the hubcap (only if you can and want to), or put it in the trunk with the flat tire.

11. Stow Your Stuff

Congratulate yourself for being prepared, and be sure you put everything back in the trunk before you pull away. If you have a tire gauge, check to see if the spare has plenty of air (temporary spares typically require 60 psi). If the pressure is low, drive with caution to the nearest repair shop.

12. Get Your Damaged Tire Repaired

Spare tires aren’t meant to be driven on for long. Get your car to a tire shop or garage as quickly as possible to buy new tires or get your old tire patched.

Should You File an Insurance Claim?

It can be convenient and less expensive to purchase roadside assistance coverage as an add-on to your car insurance policy. But keep in mind that when you use your insurer’s plan — even for a flat tire — it can count as an insurance claim.

Though occasional use likely won’t cause your insurer to drop you or raise your auto insurance rates, if you make several roadside assistance claims over a short period, it could affect your overall policy. You might want to ask your insurance agent if multiple roadside assistance claims could be a problem. (And get it in writing if the answer is no.)

Do Insurance Policy Deductibles Apply to Roadside Assistance Claims?

Even with roadside assistance coverage, you could end up having to pay some out-of-pocket costs. And if your auto insurance policy has a deductible that applies to roadside assistance claims, you might have to pay that amount, as well. This could be another topic to cover with your insurance agent. (Read more about the different types of deductibles.)

Recommended: How to Lower Car Insurance

The Takeaway

Roadside assistance insurance can cover a range of problems you might have on the road — from fixing a flat tire to unlocking the car to jump-starting the battery.

Insurance companies typically offer roadside assistance as an add-on to an auto policy. Plans may look pretty much the same from one company to the next, but it can be a good idea to look beyond the basics to find the level of coverage and other benefits that are a good fit for your needs and budget.

When you’re ready to shop for auto insurance, SoFi can help. Our online auto insurance comparison tool lets you see quotes from a network of top insurance providers within minutes, saving you time and hassle.

FAQ

What should I do if my tire is flat?

If you know how to change a tire and you can pull off the road to a safe place, you might want to tackle the job yourself. But if you aren’t prepared to DIY, you can call roadside assistance instead. A technician may be able to change your tire onsite and get you back on the road for free.

Will 911 help with a flat tire?

If your tire is flat and you’re in potential danger or blocking traffic, the safest move is to turn on your flashers and call 911 for assistance. The 911 dispatcher will then assess your situation and determine whether to send help. If you don’t feel you’re in danger or that your car has become a hazard to others, you can call your roadside assistance company’s toll-free number for help.

Can you drive a couple of miles on a flat tire?

Driving on a flat tire, even for a short distance, can further damage the tire and possibly the rim. If you can turn on your hazard lights and drive slowly to a safer location, that may be your best option, but you should try to limit the distance you travel.

How much does it cost to put on a spare tire?

If you have roadside assistance coverage, it may not cost you anything to have your flat tire replaced onsite with your spare.

Should you tip roadside assistance for a flat tire?

There’s no obligation to tip any service provider your roadside assistance plan sends to help you. However, just as with any service, if you feel that person went above and beyond, you may want to show your gratitude with a tip.

Photo credit: iStock/okugawa

Auto Insurance: Must have a valid driver’s license. Not available in all states.
Home and Renters Insurance: Insurance not available in all states.
Experian is a registered trademark of Experian.
SoFi Insurance Agency, LLC. (“”SoFi””) is compensated by Experian for each customer who purchases a policy through the SoFi-Experian partnership.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

SOPRO-Q324-002

Think of 24-hour roadside assistance coverage for your truck or car like having another tool in your emergency kit. Roadside assistance can provide the services you need to get you back behind the wheel ASAP. Services include changing flat tires, fuel delivery, jump-starts, and lockout assistance. The cost for roadside assistance when added on to an auto insurance policy is around $10 to $20 a year.

Before you sign up for roadside assistance, it can be useful to know some basics. In this guide, we’ll look at what you can expect when you enroll in a roadside assistance program.

What Is 24-Hour Roadside Assistance?

Roadside assistance plans cover a range of problems that commonly affect motorists. Whether you’re stuck on a busy highway or a lonely roadside, in a mall parking lot or your own driveway, you can ask for help with a dead battery, flat tire, being locked out, and more. These programs not only cover cars and trucks but also motorcycles, RVs, and boat trailers.

Since problems can happen at any time, roadside assistance programs make their services available around the clock. There is no deductible for service calls. Depending on your plan, any costs you incur in an emergency may even be reimbursed.

Recommended: Ways to Save on Car Maintenance

What Are Some Benefits of 24-Hour Roadside Assistance?

Roadside assistance is designed to cover all drivers, but it can be especially useful for parents of young children, first-time drivers, and people with physical limitations. Probably the top benefit of having 24-hour roadside assistance coverage is that there’s a number to call any time you’re in need. You can keep that number programmed in your phone or put it in your wallet or glove compartment — or your provider may offer an app.

You can call for advice or hands-on assistance, and someone will help you get what you need. Some plans may even post bond if you’re charged with a traffic violation, or reimburse you if you need to stay in a hotel overnight because your car broke down. Some plans include other benefits, such as travel discounts and rewards points.

Recommended: How to Get Car Insurance

What Does 24-Hour Roadside Assistance Cover?

Assistance programs vary significantly depending on the service provider, the coverage level, and what you’re willing to pay. So when you’re comparing roadside assistance for cars and trucks, it’s important to understand the details of what each plan covers. Roadside assistance is not intended for use after an accident. In that case, 911 will arrange for help to arrive.

Most companies that offer roadside assistance programs set limits on what they will and won’t pay for. A provider may offer to deliver fuel to your vehicle for free, for example, but you can expect to be charged for the gas you receive. Similarly, roadside assistance may offer free lockout assistance, but there may be a charge if you need to have a new key made. If your car needs a tow, there may be a limit on how many miles you can go for free. There may also be a limit on how many service calls you can make in a year.

Plans have different rules on whether a particular driver or vehicle qualifies for a service call. With some plans, you must be driving your own car when you call for assistance. Other plans will cover you even if you’re the passenger or driver in someone else’s car.

Programs generally include some type of coverage for:

Vehicle Towing

If your vehicle can’t be safely repaired or restarted onsite, roadside assistance can tow it to a nearby repair shop.

Battery Jump-Start or Replacement

Roadside assistance can give your dead battery a jump and, if that doesn’t work, install a new battery onsite or give you a tow.

Changing a Flat Tire

If you have a usable spare tire, your service provider likely can change a flat or blown-out tire onsite. If not, they can tow you somewhere for help.

Lockout Assistance

If you’ve locked your keys in your car, roadside assistance can get a locksmith to help. Even if you’ve lost your keys, the service may be able to get you back in your vehicle and back on the road.

Winching Service

Stuck in snow, mud, sand, or water? Your service provider may bring in a winch to extricate your car or truck.

Fuel Delivery

If you run out of gas, your provider can deliver fuel to your location. And if the battery in your electric car needs a charge, you can ask for a tow to the nearest charging station.

Quick Fix First-Aid

If you have a minor mechanical problem that can be fixed quickly, it may be possible to do so onsite. If not, the service can tow your car to a nearby repair shop.

What Are Some Ways Drivers Can Get 24-Hour Roadside Protection?

There are few different ways you can get roadside assistance coverage for yourself and your family members. For individuals who set aside time for personal insurance planning, consider adding roadside assistance to your list.

Auto Club Membership

Probably the best-known way to get 24-hour roadside assistance is through an auto club like AAA (pronounced “triple A”). The company will issue you a membership card with numbers to call for service. You may also be able to download an app or send a text to get service.

Plans range from $60 to $150 or more per year. Your price will depend on how many family members are covered, your location, and the services you’ve selected.

Credit Card Company Benefits

You may be able to access roadside assistance through one of your credit cards. Again, the cost for your overall coverage or a specific service will vary depending on the plan. For example, one credit card provides the service for free to its members but charges $69.95 for a standard service call, including 5 miles of towing.

Vehicle Manufacturer

Some car and truck manufacturers also offer roadside assistance as a perk for new car buyers. Your vehicle may come with protection that lasts for a few years or the length of your limited warranty, or it may be available for only a few months as a free trial for a service you can later purchase. Your sales agreement should provide the details on what your plan covers, or you can ask the dealership.

Car Insurance Company

Many car insurance companies make some type of roadside assistance coverage available to their customers. Some plans provide only the basics, while others may offer two or three different levels of coverage. Costs range from $10 to $60 or more a year.

When you’re considering cost, keep in mind that you may be able to lower your car insurance cost by bundling it with other types of insurance coverage.

Which Insurance Companies Offer 24-Hour Roadside Assistance?

Insurance companies that provide 24-hour roadside assistance typically offer the service as an add-on to an auto policy. However, in some instances you may be able to access a roadside protection membership without being a policyholder.

If you aren’t sure if you already have roadside protection, contact your agent or log in to your account on your insurer’s website to get information about your coverage. You may also view benefits via online insurance comparison sites. The information also may appear on your insurance card.

Here are a few companies that offer roadside assistance:

Allstate

Allstate offers its 24-hour roadside assistance programs to both policyholders and members of their household. Costs and limitations will vary based on the plan you choose.

Geico

Geico’s roadside assistance program is available to policyholders as an add-on, and it covers most of the basics other plans offer. The cost is determined by the number of vehicles you want to cover.

Liberty Mutual

To access Liberty Mutual’s 24-hour assistance program, which offers basic roadside services, you must purchase optional towing and labor coverage as an add-on to your policy.

Nationwide

Nationwide offers 24-hour roadside assistance as an optional add-on for policyholders. The plan covers the same basic services offered by other insurers, but optional features and program details vary by state.

Progressive

Emergency roadside assistance is available as an optional add-on for Progressive auto insurance policyholders. Progressive’s program covers service basics such as towing, jump-starts, lockout assistance, etc.

State Farm

State Farm’s roadside assistance program is an add-on for policyholders. If you have this coverage and need assistance, State Farm will be billed directly for any basic services you receive, so you won’t have to worry about waiting to be reimbursed.

(The above coverages are accurate as of the writing of this article but may differ in the future.)

What Is the Average Cost of 24-Hour Roadside Assistance for Cars?

When added to your car insurance policy, roadside assistance coverage costs an average of $20 per year. The price of a roadside assistance plan can vary based on how many vehicles you want to cover, where you live, whether your coverage is through your auto insurance or some other source, and the level of coverage you choose.

Some plans charge less for coverage and more for services, and vice-versa. It’s a good idea to compare several different plans and choose the one that works best for your individual needs and budget — particularly if you’re looking to lower your car insurance.

What Is the Average Cost of 24-Hour Roadside Assistance for Trucks?

The cost of roadside assistance for a pickup truck is similar to the cost for a car. If you have an RV or another large vehicle, however, you’ll need to check out a plan tailored for the problems you might encounter.

How Much Does 24-Hour Roadside Assistance Cost Without Insurance?

The national average cost of a tow without roadside assistance coverage is $109, or between $2.50 and $7 per mile.

What Makes 24-Hour Roadside Assistance Different from Other Coverage?

Standard car insurance is designed to protect car owners against financial losses when they’re in an accident, or if their car is damaged, stolen, or vandalized. But a standard auto policy doesn’t typically include roadside assistance for something like a flat tire or running out of gas. That’s a different kind of coverage, and it usually costs extra to add it to a car insurance policy.

Another difference: In most states, you are required to carry minimum required car insurance. You aren’t required to carry roadside assistance coverage. It’s your choice.

How Do You Choose a 24-Hour Roadside Assistance Program?

There are a few points you should consider when you’re shopping for a roadside assistance program:

Do You Already Have Protection?

If you aren’t sure, check your car warranty, credit cards, and your car insurance policy. Even if you are covered, it can be a good idea to compare your coverage to what’s available to make sure you have everything you need.

What Are the Coverage Limits?

Read the fine print for details and coverage limits before you sign up for a plan. Be sure you’re getting the services you expect and want most.

What Will It Cost?

Plans are generally low cost, ranging from $20 to $150 or more per year. Compare the costs of different plans and determine which works best with your budget.

Does the Provider Get Good Reviews?

Don’t forget to check the provider’s reputation. Reliability is important when you’re stuck on the side of the road waiting for a tow or jump-start. An important part of researching different plans includes reading customer reviews.

The Takeaway

A 24-hour roadside assistance plan provides drivers with whatever help they need to get back on the road as soon as possible. Drivers typically get roadside assistance through their auto insurance, but you can also find it via credit card benefits, car manufacturers, and auto clubs like AAA. Prices vary from around $10 to $20/year as an auto insurance add-on, to $60 to $150 or more/year through an auto club. Considering that the cost of a single tow without coverage can be over $100, many people say the cost of roadside assistance is well worth it.

If you’d like to check out roadside assistance options, you can start by going online to compare your current auto insurance plan and benefits with other major companies.

When you’re ready to shop for auto insurance, SoFi can help. Our online auto insurance comparison tool lets you see quotes from a network of top insurance providers within minutes, saving you time and hassle.

FAQ

Does using roadside assistance increase your premium?

If you make only one or two claims a year, utilizing roadside assistance is unlikely to affect your insurance premium. But if you make more than four or five roadside assistance claims in a year, your insurance company may want an explanation.

What does roadside assistance cover?

Every plan is different, but most include basic coverage for lockout assistance, changing a flat tire, jump-starting a battery, fuel delivery, using a winch to extract a stuck vehicle, minor engine fixes, and towing.

Photo credit: iStock/nopponpat

Auto Insurance: Must have a valid driver’s license. Not available in all states.
Home and Renters Insurance: Insurance not available in all states.
Experian is a registered trademark of Experian.
SoFi Insurance Agency, LLC. (“”SoFi””) is compensated by Experian for each customer who purchases a policy through the SoFi-Experian partnership.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

SOPRO-Q324-005

Group term and voluntary term life insurance are both offered by employers and other organizations, providing convenient and low-cost baseline coverage. Depending on the employer, coverage may not be as comprehensive as some employees might require.

We’ll get into what group term life insurance is, how it’s different from voluntary term, and who should take advantage of these policies. You’ll also find out what portion of group term life insurance benefits is taxable and whether premiums are tax deductible.

Group Term Life Insurance, Defined

What is group term life insurance exactly? Term life insurance covers a policyholder for a set amount of time, hence the “term” part. (This roundup of life insurance terminology can be helpful for the uninitiated.) It pays a death benefit to beneficiaries — usually family members or other dependents — if the insured person dies within that time frame.

Group term life insurance is simply a policy offered to a group — often by an employer, trade union, or other organization — often at no cost to the employee. Group life insurance is sometimes referred to as employer-provided life insurance.

How Group Term Life Insurance Works

Group term life insurance coverage usually covers the timeframe of the member’s employment. (When it’s not purchased through an employer, terms range from 10 to 30 years.) All premium payments and death benefits tend to be fixed. If the policyholder lives past the end date on the policy, no benefit is paid and the premium payments are forfeited.

This type of policy is sometimes referred to as a “pure” life insurance product. That is, it has no cash value. Other types of life insurance do.

In group policies, many employers pay for baseline coverage for the employee, who pays nothing. Additional term life policies may be available at an affordable rate to cover a spouse, child (learn why life insurance for children might be necessary), or other dependent, with premiums deducted from payroll. Since an employer or similar entity is buying the coverage for many people at once, their savings are passed along to the members.

Recommended: Why Is Life Insurance Important?

What Group Term Life Insurance Typically Covers

Often, group policies pay out the equivalent of one year’s salary. Group term may cover fewer causes of death than other policies, but generally includes critical illness. Death by self-inflicted wounds may be excluded for the first 1 to 3 years of the policy.

Pros and Cons of Group Term Life Insurance

Group term life insurance has advantages and disadvantages.

Pros of Group Term Life Insurance:

•   Cost. Baseline policies are often free.

•   Availability. There’s usually no medical exam or other strict requirements.

•   Simple application. Often employees just check a box or sign a form.

•   Coverage when you need it. Families have some coverage in the event their main source of income is lost.

Cons of Group Term Life Insurance:

•   Low payout. Coverage is typically on the low side, equivalent to one year’s salary at most. Experts typically recommend that life insurance cover 10x your salary or more, depending on your financial obligations.

•   Lack of choice. A single policy is typically selected by your employer to cover all members, regardless of situation.

•   Non-portable. If you leave your job, you lose your coverage.

Requirements of Group Term Life Insurance

Requirements are minimal and usually involve being a permanent employee. You may need to be employed for a certain period of time (say, 90 days) before qualifying. There is typically no medical exam required. Individual workplace requirements can vary.

Voluntary Term Life Insurance, Defined

Similar to group term life insurance, voluntary policies are offered by an employer or membership group. However, voluntary policies are entirely optional (or voluntary) benefits the employee can purchase. Because your employer negotiates a group rate, it’s usually more affordable than purchasing online insurance yourself.

If you’re curious about non-employer-based policies, this is a helpful look at how to buy life insurance.

As with group term, voluntary term life insurance has no cash value nor options for investing your premiums. (Whole life insurance does have cash value. Here’s a good comparison of term vs. whole life insurance.)

How Voluntary Term Life Insurance Works

As with most life insurance, voluntary term pays out a lump sum to your beneficiaries if you die while the policy is in effect. Premiums are deducted from the policyholder’s paycheck.

Voluntary term life insurance coverage may be offered on an annual basis. The employee can choose to re-up, change, or cancel during their company’s open enrollment period. Rates go up over time, either annually or as the employee enters a new age bracket.

Recommended: How Long Do You Have to Have Life Insurance Before You Die?

What Voluntary Term Life Insurance Typically Covers

Employees may select their amount of coverage, usually in multiples of their salary. The more coverage you select, the higher your premium will be. Limitations may be set as to the level of coverage you can choose or the availability of certain riders, compared to individual life insurance. Coverage varies by employer. But your voluntary policy should have the same coverage options and exclusions as your group term policy.

For lower coverage amounts, no medical information may be required. Higher coverage amounts often require a health questionnaire or medical exam.

Pros and Cons of Voluntary Life Insurance

As you might guess, the advantages and disadvantages of voluntary term insurance are similar to those of group term insurance. However, they’re not identical.

Pros of Voluntary Term Life Insurance:

•   Low cost. While not free, premiums are normally more affordable than for individual policies due to the employer’s group discount. You can learn about typical premium costs in this look at how much life insurance is.

•   No medical exam. No medical exam is required for less coverage. Older employees and those with health issues usually get a better deal through voluntary term plans than on their own.

•   Simplicity. Employees just need to select the level of coverage they want.

•   More-complete coverage. Because you can choose your level of coverage, payout benefits could cover loved ones completely in case of the policyholder’s death.

•   Portability. If you leave your job, you might be able to keep your coverage, but your premiums may rise significantly.

Cons of Voluntary Term Life Insurance:

•   Limitations. Employees are limited to a single insurance company. There may also be limits to the level of coverage and available policy riders.

•   Short-term solution. Employees who don’t plan on staying with their company long-term may be better served by an individual policy.

Main Difference Between Voluntary and Group Term Life Insurance

Group term life insurance is typically free through your employer, while voluntary term is an optional benefit the employee can purchase at a reduced rate. Also, voluntary term insurance usually offers different levels of coverage, while group is provided at one level for all employees.

If you’re still not clear on the differences, this high-level introduction to what is life insurance may be useful.

Requirements for Voluntary Term Life Insurance

Like basic group insurance, requirements are minimal aside from a potential waiting period for new employees. There is typically no medical exam required. Individual workplace requirements can vary.

Is Group Term Life Insurance Taxable?

There are two components to group term life insurance that pertain to taxes: premiums and payouts.

Are Group Term Life Premiums Tax Deductible?

Life insurance premiums are usually not tax deductible. The IRS considers such premiums a “personal expense.” There may be exceptions for beneficiaries that are charitable organizations. (SoFi does not provide tax advice. Please consult with a tax professional prior to making any decision.)

Are Group Term Life Payouts Taxable?

The first $50,000 of payouts from group term life insurance carried by an employer is excluded from taxes. After that, the benefit is counted as income and subject to income tax as well as social security and Medicare taxes.

The Takeaway

Term life insurance typically pays out a lump sum equal to a multiple of the policyholder’s salary upon their death. It has no cash value or investment options. Employers, unions and other organizations may offer group term life insurance as a free benefit. Employees may upgrade their coverage with voluntary term life insurance at a low cost, deducted from their paycheck.

Voluntary term policies can be valuable to older employees and those with health problems because premiums are low and a medical exam is usually not required. However, group policies can have limitations that make them less comprehensive than individual policies.

SoFi has partnered with Ladder to offer competitive term life insurance policies that are quick to set up and easy to understand. Apply in just minutes and get an instant decision. As your circumstances change, you can update or cancel your policy with no fees and no hassles.

FAQ

What are the disadvantages of group term insurance?

Coverage amounts tend to be much smaller than what experts recommend. You’ll need to use the insurance carrier chosen by your employer and, if you leave your job, you’ll lose the policy.

What happens to my group life insurance when I retire?

Retirees may have the opportunity to continue paying for their life insurance. Before you retire, explore your options, comparing cost and benefits.

Is group term life insurance the same as life insurance?

Group term life insurance is one type of life insurance that pays out a lump sum upon the policyholder’s death. It has no cash value, unlike whole life policies, which are another type of life insurance.

Photo credit: iStock/akinbostanci

Coverage and pricing is subject to eligibility and underwriting criteria.
Ladder Insurance Services, LLC (CA license # OK22568; AR license # 3000140372) distributes term life insurance products issued by multiple insurers- for further details see ladderlife.com. All insurance products are governed by the terms set forth in the applicable insurance policy. Each insurer has financial responsibility for its own products.
Ladder, SoFi and SoFi Agency are separate, independent entities and are not responsible for the financial condition, business, or legal obligations of the other, SoFi Technologies, Inc. (SoFi) and SoFi Insurance Agency, LLC (SoFi Agency) do not issue, underwrite insurance or pay claims under LadderlifeTM policies. SoFi is compensated by Ladder for each issued term life policy.
Ladder offers coverage to people who are between the ages of 20 and 60 as of their nearest birthday. Your current age plus the term length cannot exceed 70 years.
All services from Ladder Insurance Services, LLC are their own. Once you reach Ladder, SoFi is not involved and has no control over the products or services involved. The Ladder service is limited to documents and does not provide legal advice. Individual circumstances are unique and using documents provided is not a substitute for obtaining legal advice.

Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

SOPRO-Q324-009