GAP insurance, or 'Guaranteed Auto Protection' is a type of policy which will cover the difference between your car’s actual value and the amount you still owe on it. It’s common knowledge that a brand-new car loses a large amount of value when you drive it off the lot, and gap insurance will protect you if you crash while still upside down on your loan. For example, if you still owe $20,000 on a car, but the value of your car is just $18,000, gap coverage will cover the $2,000 difference you would otherwise owe.