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Gap Insurence - Everthing You Need To Know In 2018 Gap Insurance Gap Insurance Definition, Meaning & Example What is Gap Insurance ? Gap insurance is a type of auto insurance that car owners can have to protect themselves against losings that can arose when the amount of compensation got from a total loss doesn't fully cover the amount the insured owe on the vehicle's financing or lease agreement. As an example of gap insurance at work, consider Mike's car, which is worth $16,000. However, he still owes a total of $20,000 worth of car payments. In the event that Mike's car is completely written off as a result of an accident or theft, Mike's car insurance policy will reimburse him with $16,000. Types of Gap Insurance ROI.( Return to invoice cover) the difference between your car insurer's maximum or 'total loss payment' and the exact price you paid for the car . RTV (Return to Value ) VRC (Vehicle Replacement Cover