GAP insurance  may help offset the difference between the money an insurance company  is willing to give you and the actual value of your car if your vehicle is totaled.  I have seen a few totaled cars lately that were not caused by the owner.  Sometimes the paying insurance companies have left the owners 20 to 30% short of actual replacement costs, especially after titling the replacement car.  I’m not saying it’s  perfect for all owners, but it’s something to look into.  It’s tough to face the fact that replacing your car could cost you a couple of grand, even if the wreck isn’t your fault.

Here’s an example from Fox Business

For instance: You buy a car that stickers for $24,000 and rolls out the door with taxes and fees for $26,500. You put down only $1,000, sign your financing papers, get a car insurance policy and drive off the lot.

Nearly a year later, your “new car” is totaled out. You file a collision claim with your insurer and find out that the actual cash value of your vehicle is only $19,200. This means after your $500 deductible is taken out, your car insurance company will pay out $18,700 to your lienholder.

You still owe $23,500 on the car, so you’re left with a “gap” of $4,800.

With a gap insurance policy that includes coverage for your deductible, this whole amount would be covered. If you didn’t get gap insurance, you’re left paying the difference out of your own pocket for a car you no longer have – and that hurts, because you’ve got to buy another car, too.

http://www.foxbusiness.com/personal-finance/2011/06/24/what-gap-insurance-does-and-does-not-cover/