Auto Loan/Lease Coverage In a nutshell Simply put, loan/lease gap coverage is insurance that helps you pay off your loan or lease if your car is totaled and you owe more than it's worth. If you decide on this coverage, it'll pay up to 25% more than your car's actual cash value to help you take care of your loan or lease. So let's say you're in an accident and your car's a total loss. Your insurance company values it at $20,000 but you still owe $25,000 on your loan. Your comprehensive or collision would pay its $20,000 value, minus your deductible. Loan/lease gap coverage would then cover the extra $5,000 you need to pay off your lender. Without it, you may have to pay that $5,000 out of pocket. Ouch. What you should know It's important to note that you'll need to meet the following requirements to qualify for this coverage: You'll need to have collision/comprehensive coverage Your car needs to be leased or financed You might not need this coverage if: Loan/lease gap coverage is built into your auto loan or lease (check your loan or lease agreement) You've paid down you loan or lease and you owe less than what your car's worth Finally, loan/lease gap coverage doesn't cover things like rollover balances from another car, late fees and past-due payments, or extended warranties. Does it matter who's at fault? Nope. Your loan/lease gap coverage will take effect regardless of who's responsible.