It helps to protect the car owners against losses that can arise when the amount of compensation received from a total loss does not fully cover the amount the insured owes on the vehicle’s financing or lease agreement. This situation arises when the balance owed on a car loan is greater than the book value of the vehicle. For example, suppose Mr. Joshi’s car, which is worth Rs. 20 lakhs. However, he still owes a total of Rs. 22 lakhs worth of car payments. If his car is completely written off as a result of an accident or theft, Mr. Joshi’s car insurance policy will reimburse him with Rs. 20 lakhs. Because Mr. Joshi owes the car financing company Rs. 20 lakhs, however, he will still be Rs. 2 lakhs short, even though he no longer has a car. But if he purchases this GAP add-on cover, it would cover the Rs. 2 lakhs “gap,” or the difference between the money received from reimbursement and the amount still owed on the car.