Gap insurance covers the difference between what you owe on a leased vehicle and its actual cash value if it’s totaled or stolen. Since lease agreements often require gap insurance, it ensures you don’t owe the leasing company the remaining balance after your standard auto insurance payout. For example, if you lease a car worth $30,000 and it depreciates to $25,000 at the time of an accident, but you still owe $28,000, your auto insurer pays $25,000 (the car’s value), and gap insurance covers the $3,000 shortfall. Without it, you’d be responsible for that gap. Some lease contracts include gap insurance automatically, while others require you to purchase it separately. It’s typically acquired through the leasing company or an independent insurer. Gap insurance is essential for leased vehicles due to rapid depreciation, ensuring you’re not left with an unpaid balance after a total loss.