GAP insurance protects the borrower if the car is written off or totalled by paying the remaining difference between the actual cash value of a vehicle and the balance still owed on the financing.
GAP insurance is typically offered by a finance company at time of purchase.
GAP insurance is often paid upfront and the purchaser is usually entitled to a refund of the unused portion of the premium if the vehicle is sold or refinanced before the end of the loan term.
[citation needed] In either case coverage is usually the same and sold as a soft product through the car dealership.
Some exclusions include a maximum loss limit of $50,000 while others require a loan term of less than 84 months.