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How to Get a GAP Insurance Refund

How to get a gap insurance refund

GAP insurance is designed to help provide additional financial coverage for a car that is being financed by its owners rather than owned outright. If something were to happen to that car, such as it getting totaled in an accident, then you would be on the line for any remaining loan payments. Your car insurance can provide coverage for this if you add GAP insurance to your policy. How much you would have to pay is dependent on the car’s value which has depreciated the moment you drove it off the lot. This post covers everything you need to know about getting a refund from your GAP coverage and why it is such a useful insurance product.

What is GAP Insurance?

Loaning and leasing are great ways for people to drive the cars they want at an affordable rate. More and more drivers opt for this method of vehicle ownership. An important aspect of leasing and loaning cars is their current value which insurance providers use as a payout should the car be totaled in an accident. As previously mentioned, a car’s value begins decreasing right after your purchase or finance it. In fact, just under 10% of the car’s value is lost when it is driven off the lot. Meanwhile, your loan or lease payments remain constant until it is fully paid off. GAP insurance primarily covered these amounts when they go unpaid as the car is totaled.

What Does it Mean to be Upside Down on a Loan?

When your car’s value is currently less than the amount you owe on your loan or lease, then you would be considered upside down on your loan. This is usually the case when you first have a car loaned or leased unless you make a big down payment. You won’t get penalized for being upside down on a loan, but you do not want to be upside down on a loan when you file a GAP insurance claim.

Is GAP Insurance Wise to Get?

GAP insurance may be a smart alternative, one that can save you a lot of money if your vehicle is damaged or stolen. If your car is in an accident, you are responsible for the full cost of the repairs. GAP coverage, in the case of leasing a vehicle, can be an incredible help. GAP insurance has value when you finance a car. Vehicles depreciate over time, with some depreciation rates being greater than others. As a result, before making the purchase, do your homework and consider purchasing GAP insurance.

When Would GAP Insurance Not be Wise to Get?

Inversely, there may be circumstances where GAP insurance won’t benefit you even if you do lease or finance your car.

Here’s when you may not need GAP insurance:

  • Made a big down payment - To avoid being upside down on loan, some drivers will make a large first payment towards their car when they first drive it. At that point, maintaining GAP insurance can cost more than the amount you have left on your lease or finance plan.
  • Pay off loan at once - For the same reason as before, there won’t be a need for GAP insurance if you have nothing to cover by fully paying off your car.
  • You can get a significant discount on the car - You may be lucky enough to get a discount on your car when initially leasing or financing it. The discount may be significant enough for GAP insurance to not be worth it.

How Can You Get a GAP Insurance Refund?

If you were to do any of the previously mentioned things that would make GAP insurance obsolete, you may be able to get a refund for the unused coverage if you already purchased GAP insurance. The insurance company must return any remaining premiums to you. In order to have the check sent, you must notify the insurer and provide them with a payoff notice.

You’ll need to look up your GAP insurance coverage’s terms and conditions on your policy’s GAP insurance contract to acquire a refund check for the premium you paid. If you do not qualify for a refund, this will guarantee that you get one. GAP insurance coverage providers may have various conditions and costs.

If your contract is canceled within 30 days of receiving your policy or coverage, you might be able to receive a GAP refund. If you qualify for a GAP insurance refund, you can contact your insurance provider however you can and request a refund and cancellation.

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