The loan or lease GAP insurance provides valuable protection when the car is totaled in an accident. In the first few years of the life of the car, the actual cash value offered by the insurance company when the car is totaled would usually be lesser than the actual retail value of the car. The GAP insurance would compensate this difference. A few insurance companies would pay the regular insurance deductible also as part of the damages claim under this coverage.
If the GAP coverage were bought through the Personal Auto Policy, then the insurance company would have filed the calculations of the premium payments with the insurance regulatory body of that particular state. In such a case, the premium would be paid as part of the total car insurance premium payment. On the other hand, if the GAP policy were purchased from an individual insurance carrier, the premiums would be filed and permitted by the department of insurance of each state. These premiums would usually be paid as annual payments.