Gap insurance is an auto protection insurance. It covers the difference between your car’s depreciated value and what you owe on your loan if your car is stolen or totaled. The coverage is to cover yourself when you get into an accident with a brand-new car.
When you purchase a car from a dealership it usually will come with an example of a gap insurance. The whole reason is due to your vehicle losing value the moment you drive it off the lot. Going from a new car to being used.
If you were involved in an accident, your insurance company probably wouldn’t cover the cost of what you own on it. Most likely, they’ll only cover the cost of replacing your vehicle with one of the same value. With gap insurance, your car will be covered on what was previously stated.