GAP insurance policies are often offered at auto dealerships as a comparatively low cost add-onto the car loan that provides coverage for the duration of the loan.

GAP insurance covers the difference between a car's actual cash value when it is stolen or wreckedand the amount the consumer owes the leasing or finance company.

GAP insurance pays the difference between what someone owes on their car loan and the actual cashvalue of the vehicle in the event that it is stolen or damaged.