I just recently returned from the dealer. I spent $595 on the Toyota gap insurance while I was there since they failed to have me sign a document.
I will be in the negative for a while because I financed the entire cost of the car100% of italong with the extended warranty and the gap insurance for 6 years.
State Farm declined to provide GAP in this state when I contacted, though. No insurance companies, they claimed, do. I now have 30 days to compare offers to see if I can find one that beats the Toyota offer, and in the interim, I can get insurance for the first month for $25. Within the first 30 days, you can cancel your Toyota GAP insurance and receive a full refund less a $25 cancellation fee. After that, you can cancel it whenever and get a prorated refund.
Although paying insurance premiums is annoying, $595 will look like good money if your car is totaled and you are thousands of dollars in debt as a result.
In This Article...
How do I terminate my gap coverage?
It may take some effort to navigate your dealership’s return policy for gap insurance. You’ll need to get in touch with the dealership’s insurance provider, and you should generally wait until you have a new gap lease or loan coverage in place before canceling. Your reimbursement for the gap insurance could take a few days to several weeks to arrive. Here are the requirements for terminating a dealership’s gap insurance.
Locate your vehicle purchase agreement from the dealer
Make sure you have copies of the documents you signed when you purchased your car. Ask the dealership for duplicates if you can’t find them. They might be able to send you copies by email, which can save you time.
Contact the dealer’s gap lease or loan insurance provider
Ask the organization you are now insured by what has to be done to terminate your gap insurance. The request for cancellation may need to be in writing, but you might be able to scan, email, or fax it instead.
Provide your current contact information
Make sure the insurance provider for the dealership has your most recent address. Without it, the check can be delivered to a former address.
Purchase alternate gap lease or loan coverage now
Before canceling your current policy, get in touch with your American Family representative and make a purchase so that the coverage is activated. Before canceling your old policy, make sure to find out the specific dates when your new coverage will go into effect to ensure that there won’t be any gaps in coverage while you switch providers.
Sign and return all required paperwork promptly
To speed up the procedure, make sure all paperwork is signed and returned as soon as it is received.
You will be able to pay for the insurance in a method that is convenient for you if you purchase your gap lease or loan coverage from American Family. The cheque you get from the dealership’s insurance group can be directly applied to your current policy, or you can deposit the money and make monthly payments in its place.
Contact your American Family Insurance agent for an estimate when you are thinking about your gap insurance requirements. With a policy offered by a company you know and trust, you’ll experience more peace of mind.
When You Can Get a GAP Insurance Refund
Start with the positive news. You can normally cancel your GAP insurance and receive a return in one of three circumstances:
1. Your loan is being repaid.
It can be a terrific feeling to pay off your car loan and get rid of that tiresome monthly cost (including those outrageous interest payments). Better still? You are qualified for a portion of the GAP coverage that you haven’t yet used if you pay off your auto loan early. Here’s the justification for your meager return. While your loan was still open, you previously used a portion of your GAP insurance. Therefore, you will only receive a prorated refund for the portion that you haven’t yet utilized.
2. You’re transferring to a new insurance provider.
You can choose a different supplier of insurance if you’re not happy with your current one. You are qualified for a refund for the cancelled coverage you didn’t use after canceling your policy with your original provider (be sure to have new auto insurance in place before canceling the prior insurance). Normally, you can receive a full refund if you cancel your insurance within 30 days of the policy’s start date (including GAP insurance costs). Your refund will be prorated if you cancel your insurance after 30 days have passed. For information regarding your coverage, contact your insurance company.
3. You’re trading in or selling your vehicle.
You can receive a reimbursement for the portion of the coverage you didn’t utilize if you sell or trade an automobile for which you purchased GAP insurance. Don’t terminate your insurance until the vehicle has been lawfully sold or exchanged.
Here is one instance. Let’s imagine you first made the decision to purchase a $30,000 car and borrowed $25,000 to do so. In order to safeguard your financial security in the event that the car is totaled or stolen before you have had a chance to pay off your $25,000 loan, you also purchased GAP insurance for a full year. (Smart!)
You want to end your GAP insurance coverage after three months of coverage. Any of the aforementioned factors (debt payback, changing GAP insurance providers, or selling or swapping your car) could be the cause. For the nine months of the year you didn’t utilize your GAP insurance, you’ll get a refund. Nice!
An immediate reminder on reimbursements from loan payoffs: You’ll get a portion of your GAP coverage that you haven’t utilized back once you present your loan payoff notice to your GAP insurance provider. Wait until the car is either legally no longer yours or your initial loan is formally paid off, depending on why you want to terminate your GAP insurance.
When You Cannot Get a GAP Insurance Refund
fresh good news You can only receive a GAP insurance reimbursement in one circumstance. If you count not having GAP insurance at all, it makes two.
But let’s focus on the important one. You won’t be qualified for a refund for the remaining months of coverage if your insured car is deemed a total loss and your GAP policy pays out the difference between the car’s value and your loan balance. This is because the insurance company believes that they are no longer liable for paying claims under the policy because they have already met (or surpassed) their obligations under the GAP coverage you purchased.
When is gap insurance cancellable?
After your loan balance falls below the value of the vehicle, you can cancel the gap insurance you added to your auto policy. After around two years of payments, this frequently occurs. If you trade in or sell the car, pay off your loan early, or both, you can choose not to have gap insurance.
If you lease a car, the leasing agreement may stipulate that you must maintain the coverage during the term. Similarly, if a lender compels you to get gap insurance, the finance agreement may stipulate that you must maintain the coverage until the loan is repaid. For further information, refer to your loan or lease agreements.
The gap coverage limit may be specified in the leasing agreement, the insurance policy, or your state’s insurance code. When making a gap coverage claim if you bought gap insurance from a lender, you might have to pay an early termination charge.
What occurs if I terminate my gap insurance?
You can usually cancel your gap insurance coverage, thus the answer is yes. However, you might not receive a complete refund depending on when you wish to cancel. Instead, a prorated refund will be given to you based on how long your policy has been in effect.
How long does it take to receive a refund for gap insurance?
Refunds from gap insurance often take 4-6 weeks. However, you can speed up the procedure by keeping in touch with your gap insurance provider and submitting signed documents right away.
How much will I get back for the gap?
You must first check the policy expiration date, multiply the amount you paid for the GAP insurance by the number of months your policy is valid, and then calculate your due GAP refund. By dividing the monthly cost by the number of months you won’t be utilizing the premiums, you may determine your owed refund.
For instance, if you paid $900 for a 36-month period of coverage, your monthly payment would be $25. After 22 months, you have the option of requesting a refund for the remaining 14 months of coverage if you decide you no longer require GAP insurance. Your reimbursement will be $350 in that scenario.
Keep in mind that this only applies if you pay the entire GAP insurance premium up advance.
Full GAP Insurance Refund
Check your policy’s terms and conditions to see if you qualify for a full GAP insurance refund. Various GAP insurance companies may have different terms and costs.
If you cancel your GAP insurance within 30 days of obtaining the policy, you should often receive a full refund, however cancellation costs might be charged.
If I have complete coverage, do I still require gap insurance?
The majority of dealers and lenders provide GAP insurance for a one-time fee. In the event that any of the aforementioned events take place, it can be rolled into your loan to save you from having to pay out-of-pocket. You will normally need both collision and comprehensive coverage to obtain GAP insurance because lenders typically mandate that you purchase them for the duration of your lease or loan.
Only the real monetary worth of your car will be covered by your insurance policy on its own. In other words, your policy’s comprehension and collision coverage will pay for the value of your car at the time of the accident or theft. Fortunately, this policy’s add-on coverage bridges the “gap” between what you still owe on your loan or lease and the car’s reduced worth.
If I refinance my automobile, would my gap insurance be refunded?
Yes, as long as you paid in full up front for the coverage, you may typically get a return on gap insurance if you refinance. After refinancing, you must get in touch with your gap insurance provider and give documentation of the refinance in order to receive a reimbursement.
Am I able to revoke my extended warranty?
Anytime you decide to cancel your extended warranty, you’ll receive a prorated refund for the period that was left on your policy. If the warranty was part of your loan, your car payment won’t change, but after the refund is taken out of your balance, you might be able to pay off the car sooner.
To make the cancellation process as simple as possible, think about the following advice:
Check the small print. For information on who to contact and whether there is a cancellation fee, locate the paperwork for your insurance. Call the finance manager who sold you the extended warranty if you just purchased it and you don’t yet receive the contract. You might need to get in touch with the business through phone or letter regarding third-party warranties.
Let’s say “no. Be aware that if you phone a warranty business, you will likely be routed to a department that is trained to persuade you to stay with them. Don’t feel like you have to explain why you’re cancelingjust keep saying it “no.
Get it down on paper. Get a copy of any cancellation forms that you might be required to fill out signed by a dealership employee. Keep copies of any pertinent paperwork, including your cancellation letter or form.
Following up To ensure that your cancellation was successful, schedule a reminder. You can speak with your lender or check your loan statement.
What occurs if you terminate the insurance on a financed vehicle?
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- When you don’t drive, you might save money by suspending or canceling your auto insurance.
- Most auto lenders won’t let you cancel or suspend your auto insurance if you financed your automobile until the loan is paid off.
- When you cancel your auto insurance, there may be a gap in coverage, which can raise your premiums in the future.
- If you revoke or suspend your insurance, your car is not insured from fire, theft, or other types of harm.
Will my debt be repaid with gap insurance?
If your automobile is totaled or stolen and you owe more than the car’s depreciated worth, gap insurance, an optional form of auto insurance, can help.