Gap insurance which is also known as Gaps covers the difference between what your vehicle is worth and how much you owe on the car. Gap insurance generally comes into play if your car is totaled in accident as the damages to your car are more than what your car is worth. Another scenario where Gap comes into play is where your car is stolen. the purpose of Gap insurance would be to pay of difference between what collision insurance covers and what you owe on the car.
Who Should/Should Not Get Gap Insurance?
People who are leasing a car or who expect to owe more than the car is worth for a significant amount of time should definitely buy gap insurance since the amount owed in case of a total loss might be significant. for those who buy their cars they would be less likely to have the need to buy a Gap insurance since their higher down payment and monthly payments would likely make them owe a balance on their cars.