Who is identified as the insured party in a gap insurance context?

In the context of gap insurance, the insured party is the borrower, purchaser, or lessee of goods. Gap insurance is specifically designed to cover the difference between what a vehicle is worth at the time of a total loss (like theft or accident) and what is still owed on the loan or lease for that vehicle.

This insurance is particularly relevant for individuals who finance or lease their vehicles, as it protects them from financial loss if their vehicle’s value depreciates more quickly than the outstanding balance on their loan. Essentially, it ensures that the borrower doesn’t end up in a situation where they are required to pay off a larger amount than the value of the vehicle they no longer possess. The other options identify parties involved in the financing or insurance process, but they do not represent the individual or entity that is directly protected by the gap insurance policy.