Vehicles depreciate the minute they leave the car lot. Most vehicles lose about 20% of their value in the first year. When there is a loss to your car, the insurance company pays the current market value or the depreciated value. It is common to see the amount of the loan exceed the market value of the car. Gap insurance covers this deficiency or "gap" between what you owe and what the car is worth. Dealers may offer gap insurance and that can be an affordable way to go. Some car insurance companies will offer it as well. It is important to discuss this with your agent as the insurance company may have conditions such as only writing gap on brand new vehicles and limiting coverage to 25% of the vehicle's market value.