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Gap Insurance
Covers the difference between what you owe on a car loan and the car's actual value if it's totaled.
What it actually means
New cars depreciate faster than most loans get paid down, so if your car is totaled early in the loan, standard insurance might pay less than you still owe. Gap insurance covers that difference so you're not left paying off a car you no longer have.
Example: You owe $28,000 on your car loan but it's only worth $22,000 when totaled — gap insurance covers the $6,000 shortfall.
See it in context
Run the free Insurance Coverage Blueprint to see how gap insurance and terms like it apply to your specific situation — no signup required.
Related terms
Collision CoverageComprehensive CoverageActual Cash Value (ACV)