Do you need GAP insurance? Maybe. But before you decide if you do or not, you probably want to know what the heck it is.

GAP stands for Guaranteed Asset Protection, and it's designed to cover the difference between what you owe on your car and its actual book value—the amount the insurance company will pay for a total loss.

Some drivers are "upside down"--that is, they owe more on their vehicle than it's worth--on their car loan. Most of us understand that when you buy a new car it loses thousands of dollars of value the minute you roll it out of the showroom and onto the street. Unless you made a substantial down payment (as much as 40%), you will almost certainly be upside down on that car loan for several years. Since your regular insurance will only pay you for the "book value" of your car, if it's totaled or stolen you could be out of pocket for thousands of dollars.

Enter GAP insurance. It will cover that "gap" in coverage and protect you from having to make that huge pay out.

If you lease a car, GAP insurance will probably be required by your leasing company. If it is required but not included, compare quotes from several companies for the best rate or ask if it can be added to your current auto insurance policy. It might keep thousands of dollars in your pocket in the event of a loss.

Your new car dealer will probably offer GAP insurance when you buy and roll it into your monthly payment. But there's a good chance you can do better on price by shopping for your own. If you think you need GAP insurance, get several quotes before you decide where to get it.

Check the terms of your insurance policy carefully. GAP insurance may not be honored if you don't have comprehensive and collision insurance coverage.

If you're planning to lease or purchase a new car, be sure to ask about GAP insurance. If the car gods refuse to smile on you and your car gets totaled or stolen, you're going to be glad you planned ahead.