Gap insurance may pay out when a vehicle is stolen, depending on the terms of the policy. If the policy language indicates that the policy will pay the actual cash value of the vehicle, the gap insurance coverage would make up the difference between the value of the vehicle and the amount owing on it.
In order for the vehicle owner to get benefits under the policy, he or she would need to have comprehensive coverage in place. This type of insurance pays out if the car is stolen. It also covers an insured person for damage caused by striking an animal, wind, or hail.
If the vehicle is recovered by police and the insurance company is going to pay for the repair costs, then gap insurance would not be needed. Gap insurance comes into play when the vehicle is a total loss, which does not apply when it can be salvaged. The insurance adjuster will consider the amount of any damage the vehicle sustained before making a decision about whether the car should be repaired or written off.
In a situation where the vehicle is stolen and is not recovered, the insured needs to make two claims. The first one is to the insurance company under the comprehensive policy, and the second one would be made under the gap insurance coverage.