GAP (Guaranteed Asset Protection) insurance is optional. To understand GAP insurance, you must first understand that with standard car insurance, your car is insured for the actual present value or depreciated value at the time of a claim. GAP insurance is an optional type of auto insurance coverage that provides additional coverage for the difference between the actual present value (ECA) of your car and the amount you owe to your lender or leasing company at the time of a claim. GAP provides you with enough money to cover the difference between what is owed for the car and what the insurance company pays in the event of an accident or loss. To avoid interest payments, NerdWallet recommends purchasing spread coverage through your auto insurer. You usually only need gap insurance for a few years until the gap between what you owe and what the car is worth closes. Not all auto insurance companies offer gap coverage or equivalent coverage, or offer it in all states, so you may need to change companies. This is where gap insurance comes in. Short for “guaranteed asset protection” (gap), this coverage differentiates between the fair market value of your car and what you still owe on the vehicle. In other words, it fills the void. These are just examples of typical coverages and exclusions that you can find in gap insurance.