GAP insurance
Coverage that may pay the difference between a totaled car’s value and what you still owe on the loan or lease.
Plain definition
Guaranteed Asset Protection (GAP) covers the shortfall when a covered total loss pays actual cash value below your auto loan or lease payoff. It is common on new cars with little down payment or long loan terms where depreciation outpaces principal paydown.
Why it matters
Without GAP, you can owe thousands on a destroyed car you no longer drive. GAP addresses that balance, not your next vehicle purchase.
Example
Your financed car is totaled; the insurer pays ACV of $18,000 but you owe $22,000. GAP may pay the $4,000 gap if the loss qualifies and you bought GAP from an eligible provider.
Common misunderstanding
GAP is not collision coverage. You still need comp/collision or a total loss payment trigger before GAP applies.
Policy language always controls. This is educational content, not advice. See our disclaimer.