An acronym for Guaranteed Asset Protection, GAP insurance is coverage designed to cover the "gap" between what your car is worth and what you actually owe a bank or finance company on it.

Since a brand-new car loses thousands of dollars of value the minute you drive it off the lot, you can start out "upside down" on your car loan—owing more on your loan than the vehicle is worth. If it's totaled or stolen before that gap is closed, which can take several years, you could end up without a car but still holding a large debt for it, the amount your regular auto insurance policy didn't cover.

Guaranteed asset protecion insurance is usually required if you're leasing a car and may be included in the contract. If it's not, shop around and compare insurance rates for the best deal.