My car was totaled, but I owe more on the loan than the insurer will pay. What is gap insurance?

Texas Department of Insurance (TDI) says gap insurance covers the difference between what you owe on your car and what it is worth. If your car is stolen or totaled, your regular auto insurance pays what the car is worth now, not what you paid or what you still owe [1].

TDI also says gap products from a car dealer or bank might not be insurance, and TDI cannot help with a problem on those [1].

Gap policies have exclusions that can lower what you get. TDI lists overdue payments, unpaid finance charges, warranty costs or balloon payments, a deductible you must pay first, and damage from a previous accident [1].

If you think the gap payment is too low, TDI says to talk to the company before you agree to the settlement. You can then ask for an appraisal [1].

Open the TDI page below and read "Know about the exclusions" and "How to question a claim amount". Then compare with your own gap contract.