Gap insurance is a type of auto insurance that covers the difference between the balance owed on a car loan or a car lease and the amount that would be received from the insurance company (based on the book value of a car) if a car is stolen or totaled. Gap insurance may be a good value on longer-term ( e.g., five or more years) car loans and car leases where it is likely that the amount that would be received from the insurance company is less than the balance owed.
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