Can I unlock the gap and get a refund? Forbes consultant

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Gap insurance can give you peace of mind if you owe more than your car’s value if combined. But if you don’t or don’t need gap insurance anymore, you may be able to get back the premium you’ve already paid.

What is GAP Insurance?

Gap insurance It covers the “gap” between what you owe on your car loan or lease and the depreciated value of your car if it was collected due to an issue covered by your policy, such as a car accident. Gap insurance is sometimes called loan/lease coverage.

How does GAP Insurance work?

You take on a small risk if you take out a loan to buy a new or used car. A new car depreciates quickly. Cars can lose more than 10% of their value in the months after purchase and more than 20% in the first year, according to CarFax.

If you destroy your car while the principal balance of the car loan remains high, you may owe the lender the difference between the loan balance and your car insurance payout. This is where gap insurance can help.

Gap insurance can be worth it for any of the following reasons:

  • You are financing the car for 60 months or more.
  • You bought a car that depreciates more quickly than a normal car.
  • Down payment was less than 20%.
  • You rent a car.

You can usually buy gap insurance from:

When you buy gap insurance, you will usually pay your premium as a lump sum or monthly premiums. A lump sum payment means that you can get back unused money spent on coverage later. If you pay monthly, you may get a lower refund if you cancel the policy early in the month.

Can you get gap insurance compensation?

You can get a refund of the gap deposit for several reasons:

  • You no longer want or need it
  • You change gap insurance companies
  • You have paid off your car loan or paid off enough of the balance that it is less than the actual cash value of the car
  • You have sold your car

If you’ve already paid for gap insurance, you can cancel it and request a refund from your car insurance company for any unused portion of coverage. For example, if you have six months of coverage left on an insurance policy at a 12-month interval and you cancel, you can be reimbursed for the six unused months minus any fees.

This is true as long as the policy has not expired yet and there is no deadline by which you have to request a refund.

Can you recover gap insurance after a total loss?

If your car is deemed a total loss and your gap coverage pays the difference between what you owe on the car loan or lease and the actual cash value of your car, you will not be eligible for gap recovery for the remaining months on your policy.

Related: Solving total car insurance problems

Can you redeem Sell Gap Insurance?

If you purchased gap insurance directly from a dealer, you have the right to request a refund as if you had purchased coverage directly from the insurance company or lender/bank, as long as you did not actually receive gap claim compensation and the policy remains. By force.

Some dealers incorporate the cost of gap insurance into the auto loan offered through the dealer.

When you can’t get a gap insurance refund

You are within your rights to unlock the gap insurance and request a refund and refund your unused coverage in most circumstances. But there are scenarios in which you may not be eligible for a refund, including the following:

  • Your gap insurance policy has expired.
  • The deadline by which you must formally file a complaint, as detailed in your document, has passed.
  • You have not paid your gap insurance policy premium.

How to unlock the gap and get your money back

If you’ve made up your mind and decided to cancel your gap insurance, here’s what you need to do to request a refund and get your unused coverage back:

  1. If you are seeking to switch to a different gap insurer, make sure you have a new policy ready to go after canceling your existing gap policy to ensure that no overrun occurs in your car coverage.
  2. Contact your gap insurance company. Have them cancel your gap insurance and issue a refund for the unused coverage.
  3. Be prepared to collect information and documentation and provide it to your insurance company if requested, such as proof that your car was sold, traded in, or paid off, and check your car’s current mileage.
  4. Fill out and submit any documents or forms required by your insurance company to complete the cancellation.

How to get a refund of gap insurance after a swap

The same refund instructions apply if you are exchanging your vehicle for another. Expect to provide evidence to your insurance company that you have traded in the car and repaid the loan in full.

How long does it take to recover an insurance gap?

Mark Friedlander, a spokesperson for the Insurance Information Institute, says:

How to calculate insurance gap recovery

The refund amount you may be eligible for depends on the cost of your gap insurance premium and the term remaining on your current policy. Most policies cover 12 months and are paid annually. A Forbes Advisor analysis found that the average cost of gap insurance added to an auto insurance policy is $60 per year.

If you paid for a gap insurance policy starting in early January and want to cancel in late April, you’ll likely be eligible for a refund of eight months’ worth of unused coverage. In this example, let’s say your annual premium is $60. Divided by 12 months, that’s about $5 per month. If you’re eligible for a refund for the 8 unused months, that’s a total of $40.

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