Auto Insurance

Gap Insurance

Auto coverage that pays the difference between what you owe and your car's value after a total loss.

Last reviewed: May 2026 · Editorial methodology

Definition

Auto insurance that covers the difference ('gap') between what you owe on a financed or leased vehicle and its actual cash value at the time of a total loss. Essential for new cars that depreciate quickly in the first 1–3 years. Without gap insurance, you can owe thousands on a totaled car that your standard collision coverage will not pay. Typically costs $20–$40/year added to your auto policy, far cheaper than buying it from the dealer.

Where this term matters

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Tip

Glossary definitions are educational. Always check your own policy language — insurers can define common terms differently from one another. When in doubt, request a written explanation from your agent.

Related terms

Collision CoverageOptional auto coverage that pays to repair your vehicle after a crash, regardless of fault.Actual Cash Value (ACV)The depreciated value of property at the time of loss — what your insurer pays minus age and wear.

Related guides

Source: Cover Forge USA editorial team|Last verified: May 2026|Methodology
Definitions are educational and may be simplified. Always refer to your policy contract and consult a licensed agent for terms that affect coverage decisions.
CF

Cover Forge USA Editorial Team

Editorial Lead

This article was researched and written by the Cover Forge USA editorial team against federal sources (NAIC, CMS, FEMA, DOL, SSA, state DOIs) and standard policy forms. Bylines organize content by topic — they do not assert individual licensure. See our editorial-policy for details.

Reviewed June 2026

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