If there is a difference between the balance that you owe on your car and the actual value of your vehicle, gap coverage will cover that amount. Gap coverage will protect you if someone steals your vehicle or if it is totaled in an automobile accident. For example, if you owe $15,000 on your vehicle and you get into a serious car accident that is not your fault, the insurance company will have to determine what your car is worth. If your car is only worth $13,000, the insurance company will cover that amount. Since you owe $2,000 on your auto loan, you would be responsible for paying that off. If you had gap coverage, you would receive a benefit for the $2000.

So who should purchase gap coverage? If you did not put a lot of money down when you bought the car, if your auto loan interest rate is high, or if you purchased a vehicle that depreciates quickly, you should consider purchasing gap coverage. If you do not owe a lot of money on your vehicle or if you put a very large down payment on it, you probably don't need the extra protection. If you suspect that you owe more money than what your vehicle is worth, you should definitely consider buying the extra coverage.

If you are interested in purchasing gap coverage, contact your insurance provider. Find out if they offer gap coverage and what it will cost you. Make sure you review your policy carefully before you sign up for the extra insurance. Gap coverage is usually affordable. It may cost you $100 to 5 percent of the vehicle's sticker price. 

If you are paying your vehicle through the dealer, you can contact them about purchasing gap insurance. If they do not offer it, you should contact an insurance company about purchasing it. Keep in mind that if your car is very old, you may not be able to get gap coverage, but it really depends on the insurance provider. The prices and rules vary among insurance providers. If you decide to purchase gap coverage with your insurance company, they will add it to your current policy.