Gap value in car insurance refers to the difference between the amount you owe on your car loan or lease and the actual cash value (ACV) of your car at the time of a total loss. When your car is totaled or stolen, your standard auto insurance typically covers only the ACV, which can be lower than the remaining balance on your loan or lease due to depreciation. This gap can leave you owing money out-of-pocket. Gap insurance is designed to cover this difference, ensuring you don’t have to pay the remaining balance on a vehicle you no longer have. This is particularly beneficial for those who have financed a large portion of their vehicle or are leasing, as it protects against financial loss if the car’s value declines quickly after purchase.