Guaranteed Asset Protection or GAP covers some of the difference (the gap) between a total loss payout on your vehicle by your comprehensive insurer and the balance owing under your credit contract. This is called a loan equity shortfall.
GAP isurance is a good idea when your newly purchased vehicle is 100% financed. In case of a vehicle write-off this insurance will pay the difference between the vehicle insurance pay-out and the money still owed to the finance company. So when your car is badly damaged in an accident you don't end up paying off finance on a car you no longer have. The GAP insurance will also cover a few related costs like hiring a rental vehicle and covering some of the costs of getting a replacement vehicle.