GAP Insurance
Also known as: guaranteed asset protection
GAP Insurance (Guaranteed Asset Protection) covers the difference between what your auto insurance pays for a totaled vehicle and what you still owe on the loan or lease. It matters most when the vehicle has depreciated faster than the loan balance has been paid down.
Related terms
Actual Cash Value (ACV)
Actual Cash Value is the dollar amount your insurance company is required to pay you for a totaled vehicle. ACV represents the price you would pay to buy a comparable used vehicle of the same make, model, year, mileage, and condition in your local market — not the vehicle's original price, replacement cost, or what you still owe on a loan.
Leased Vehicle Total Loss
When a leased vehicle is totaled, the settlement goes to the leasing company (the titled owner), not to you. You may still owe the difference between the insurance payout and the lease payoff unless you have GAP coverage.
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