Gap insurance, or Guaranteed Asset Protection insurance, is a type of coverage designed to bridge the gap between what you owe on your car loan or lease and the current market value of your vehicle if it’s totaled or stolen. Standard auto insurance typically covers the current market value of your car at the time of loss, which can be significantly less than the amount you still owe on your loan or lease. Gap insurance steps in to cover this difference, ensuring you are not left with a financial shortfall. For example, if your car’s market value is $15,000 but you owe $20,000 on your loan, gap insurance would cover the remaining $5,000, protecting you from paying out of pocket for the remaining balance. This coverage is especially valuable for new or high-depreciation vehicles.