Not sure if this is common in the industry, but I found the Gap Waiver Addendum really nice. Hyundai Motors Financial will cover the difference (the gap) between what you owe and the current value of the car if you total it before lease end period. If you happen to be upside down, which is certain to happen if you wreck early in the lease, they will cover you. You insurance will do it's thing and if they don't reach the full amount of what you owe, Genesis covers or absolves the rest.
The above is in reference to leasing through Hyundia/Genesis. I can take a snapshot of that particular page in my lease if anybody's interested. I'm in California.
GAP insurance is also commonly offered by auto insurance companies at a fraction of the cost of what dealers charge. Not sure how much the dealership charged you on your agreement, but if it equates to more than roughly $3 a month over the term of your lease or loan, it's not a great deal. From a risk standpoint on a lease, GAP has minimal benefit unless you roll A LOT of extras into your agreement like carry over payments from a prior lease OR trading in a car that you were upside down on. On a loan, GAP *could* make sense if you don't put much money down so the car is immediately worthy way less than you owe (not what you paid, what you owe) the second you drive off the lot. Even then, GAP is most relevant for the first two or so years as the loan balance decreases until it is equal to the market value.
In the event of a total loss, the first thing that happens is the finance company will check to see if you have any optional agreements like extended warranty coverage, prepaid maintenance, tire/paint protection packages, etc. Those can be cancelled at any time and a prorated refund applied to the outstanding loan or lease term. Then, the insurance company will write a check for what they deem the total loss value to be. If that insurance payout is less what is owed on the contract (whether in loan balance or remaining lease monthly payments) after those prorated refunds, you pay the difference, if any. Or GAP insurance kicks in if you have GAP, just liked you mentioned in your post. In fact, most GAP insurance policies also cover the cost of your insurance deductible up to a certain dollar amount (i.e. up to $500).
But here's the thing, the likelihood of all of the factors working against you in total loss where you end up net owing more than the sum of the insurance payout and any optional agreement refunds, is very, very small. Just like you mentioned in your post. Meaning, the risk is very low, so the cost should be very low. When dealers charge $700+ for GAP insurance, their cost is pennies on the dollar to the underwriting insurance company and the rest goes straight to dealer profit.
Not saying GAP is bad, per se. Just that for *most* people it's not a good use of money from a cost/benefit (to you) vs. the risk/profit (to the insurance company and the dealer that sells it).
