GAP insurance insures a vehicle for the difference between what would be owed on a vehicle and what an insurance company says it is worth in the event of an accident or theft. If you’re considering the purchase of a new vehicle, GAP insurance is a good choice, since a new vehicle depreciates immediately after it leaves a dealer's lot.

• What does GAP insurance cover? Depending on the policy, GAP insurance usually covers accidents and thefts, but not all policies are the same. Evaluate the coverage being offered before purchasing GAP insurance.
• Can I buy GAP insurance for my older vehicle? Probably not. A small minority of insurers provide GAP insurance for any vehicle, but it is usually available only for new cars being financed.
• Can I buy GAP insurance from the dealership? Most dealerships offer GAP insurance but usually at a higher price than lenders. Before buying additional insurance in any situation, Make sure your vehicle isn’t already covered by current insurance policies.

Source: Bobbie Sage@about.com