Lease gap
Shortfall risk on leases when insurance ACV is below the lease payoff amount.
Educational only. PolicyPlain does not sell insurance and does not provide insurance, legal, or financial advice. Coverage rules and prices vary by state and insurer. Read our full disclaimer.
Plain definition
Lease gap is the difference between what you owe the lessor at total loss and what auto insurance pays in ACV. GAP or lease-specific gap products address this; some leases include gap waivers in the contract for an upfront fee.
Why it matters
Leases assume a residual value schedule; early total loss can leave you paying for a car you no longer have unless gap is covered.
Example
Insurance totals the car at $22,000 ACV but lease payoff is $26,000. Lease gap coverage or GAP pays the $4,000 if eligible.
Common misunderstanding
Normal wear charges at lease end are not gap—they are separate lease contract fees.
Policy language always controls. This is educational content, not advice. See our disclaimer.