GAP insurance, or Guaranteed Asset Protection insurance, is an optional car insurance coverage that helps pay off your auto loan if your car is totaled or stolen and you owe more than the car's depreciated value
. When you buy or lease a new car or truck, the vehicle starts to depreciate in value the moment it leaves the car lot. Standard auto insurance policies cover the depreciated value of a car, which means a standard policy pays the current market value of the vehicle at the time of a claim
. If the amount of the loan exceeds the market value of the vehicle, gap insurance covers the difference between what a vehicle is currently worth and the amount you actually owe on it
. Gap insurance is mainly used on new and used small vehicles (cars and trucks) and heavy trucks, and some financing companies and lease contracts require it
. Gap insurance is typically offered by a finance company at the time of purchase, but most auto insurance companies also offer this coverage to consumers
