I paid $20,000 cash for a car. The car dealer said I could buy gap insurance only if I took out a loan. I've been looking for a stand-alone gap insurance policy and can't find one anywhere. Why can't I buy a gap policy if I paid cash? If my car is totaled, I want coverage for the difference between its value and the amount I paid.

You won't find a gap policy if you paid cash because gap insurance is designed to protect you against owing more on a loan for a new car than what the car is actually worth if it gets totaled.

As you know, standard car insurance pays the actual cash value of the vehicle if it's totaled, which may be hundreds or even thousands of dollars away from the price you paid for a new car, thanks to depreciation. A new car loses 11 percent to 20 percent of its value in the first year, according to the National Automobile Dealers Association. As soon as you drive the car off the lot, you lose the value of fees you paid for destination charges, licensing, advertising and documentation.

[Let Insure.com help you find affordable car insurance now.]

If you took out a loan and had no gap insurance and the car was totaled in the first couple of years, you could still owe money on the car, even after receiving a fair payout from the insurance company.

An alternative to gap insurance is new-car replacement coverage, which pays the cost to buy a brand-new car to replace the one that was totaled. You'll pay more for this car insurance feature than for a standard policy that pays the actual cash value. Allstate, Erie Insurance and MetLife Auto & Home are among the insurance companies that offer replacement coverage. Erie's new-car replacement coverage pays to replace your car if it's under two years old and is declared a total loss. The policyholder receives a new car of the same make a model or a similar vehicle if the model is no longer available, according to the insurer's website.

Ask your insurance company if it offers replacement coverage or get car insurance quotes to compare policies that include replacement coverage. For more, see Save yourself some car insurance grief: Buy gap coverage.