Cars and trucks are expensive these days.  Individuals often pay a portion out of pocket and finance the balance.

New vehicles are typically insured for liability and physical damage.  The owner (and lender) count on comprehensive and collision coverage to pay a portion of vehicle repair costs arising from a crash, hail, rock chip, etc.  Major damage or theft may cause the new vehicle to be a total loss.

A total loss claim settlement is based on the vehicle's actual cash value at the time of loss.  There is no connection between the total loss figure and the loan.  In fact, the claim settlement may not fully cover the loan.  The outstanding balance is the owner's responsibility.

Owners that buy GAP coverage have insurance for the difference between the total loss settlement and loan balance.

Consider adding GAP insurance to your auto policy if you make a small down payment, sign up for a lengthy finance term, or buy a vehicle that depreciates quickly.

Get in touch with your local auto insurance agent for cost and coverage specifics.  GAP insurance may not be available on a vehicle that is three model years or older.