GAP Insurance is also known as Guaranteed Auto Protection, and simply known as GAP within the North American financial industry. The proper term is GAP Coverage. There are two ways of getting GAP Coverage. The first type is an actual insurance policy sold by a licensed insurance broker

Insurance broker

An insurance broker finds sources for contracts of insurance on behalf of their customers. The three largest insurance brokers in the world, by revenue, are Aon, Marsh & McLennan, and Willis Group Holdings.-Purpose of insurance brokers:...

. The second type is a waiver agreement sold by a Finance & Insurance Manager. The first is regulated by the insurance industry, the second is not regulated. Coverage, regulated or not, is usually the same and sold as a soft product through the dealership. Coverage is usually financed along with your lease

Lease

A lease is a contractual arrangement calling for the lessee to pay the lessor for use of an asset. A rental agreement is a lease in which the asset is tangible property...

 or loan

Loan

A loan is a type of debt. Like all debt instruments, a loan entails the redistribution of financial assets over time, between the lender and the borrower....

. Claims are subject to a total loss. The total loss is usually determined by the primary insurance company’s third-party appraiser. GAP is the difference between the actual cash value minus all perils deductible (if at fault) and liens (especially in Canada

Canada

Canada is a North American country consisting of ten provinces and three territories. Located in the northern part of the continent, it extends from the Atlantic Ocean in the east to the Pacific Ocean in the west, and northward into the Arctic Ocean...

) and the lease or loan payout minus financed soft products (like its own cost) or negative equity on a trade. GAP Coverage is mainly used on new and used small vehicles (cars and trucks) and heavy trucks, and some financing companies require it.