Gap insurance is designed to cover the difference between what you owe on your vehicle and its current market value if it’s totaled or stolen. Standard auto insurance typically only pays out the car’s depreciated value, which can be significantly less than the amount remaining on your loan or lease. This disparity can leave you financially responsible for the remaining balance. Gap insurance provides peace of mind by ensuring that you won’t be stuck with a hefty bill in the event of a total loss. It’s especially useful for those who have a high loan balance, are leasing a vehicle, or have a vehicle that depreciates rapidly. By bridging this financial gap, the insurance helps you avoid unexpected out-of-pocket expenses and offers a safety net in challenging situations.