On various occasions throughout my career, customers would tell me sometime after walking out of the F&I(Finance and Insurane) office that they refused to buy anything the bussiness manager offered them. I would ask them if they at least purchased GAP insurance, and they would tell me no, that their own insurance company covers that sort of thing. Most of the time this is not the case.
What gap insurance does is cover the "gap" between what your car is worth and the amount of money owed to the finance company. If your vehicle is destroyed in an accident, most times your auto insurance company will pay you the "fair market value" of your car. 90% of the time this is a lot less money than what is owed to the finance company. For instance, say your car is destroyed, and the insurance company says it is worth 10,000 dollars and the amout of your remaining payments equals 14000 dollars.without gap insurance you are responsible for paying the balance of 4000 dollars to the finance company. If you think this is unfair I would tend to agree with you, but it doesn't change the fact that the bank will still call you relentlessly wanting you to come up with the payment.
Gap insurance usually costs about 500 dollars, and if you are buying a new car or truck it is worth the investment. (Not so much on previously owned vehicles)