Gap insurance will only pay the actual cash value (ACV) of the car at the time of the loss. The rate of depreciation of your car, combined with the interest you’re paying can leave you in a situation where the value of the car is worth less than the amount owed on the car.
GAP (Guaranteed Auto Protection) coverage is misleading. The guarantee is that in the event of a total loss, GAP insurance will cover your financial obligations. Gap insurance may not cover the total amount owed when the loan amount is too high. You are still legally obligated to make monthly loan payments to the lender until the loan is paid off if the gap insurance did not fully cover the remaining balance.