Filing For Gap Insurance Claims

If your car is stolen or written off, gap insurance can help you cover the difference between what your car is worth and what you owe on it. To file for gap insurance, you may be able to submit your claim in person, over the phone, or online, depending on your provider. You will need to provide documentation that shows the difference between what you owe on your loan or car lease and what the car was worth when it was stolen or written off. This may include an insurance settlement statement, a settlement check, a loan or lease contract, a loan history, a police report, and a sales agreement. Your gap insurance claim can take several weeks to process, and your vehicle insurance company must first determine the actual cash value of your vehicle.

What is gap insurance?

Gap insurance is an optional product that covers the difference between the amount you owe on your auto loan and the amount your insurance company pays if your car is stolen or totaled. This difference is known as the "gap".

When you buy a new car, it starts to depreciate in value as soon as it leaves the car lot. Most cars lose 20% of their value within a year. Standard auto insurance policies cover the depreciated value of a car, meaning they pay the current market value of the vehicle at the time of a claim. However, in the early years of owning a vehicle, the amount of the loan may exceed the market value of the car itself.

Gap insurance covers the difference between what a vehicle is currently worth (which your standard insurance will pay) and the amount you owe on it. This means that if your car is badly damaged or totaled, gap insurance will cover the "gap" between the depreciated value and the amount you still owe.

For example, if you have an auto loan balance of $30,000 on a brand-new vehicle, and the actual cash value at the time of an accident is $25,000, gap insurance will cover the remaining $5,000 that you owe on the loan.

You can typically buy gap insurance from car insurance companies, banks, or credit unions. It is important to compare prices and coverage before purchasing, as the price can vary. Gap insurance is usually offered as an add-on to your existing auto insurance policy and can be cancelled at any time.

When to file a claim

Gap insurance covers the difference between the amount you owe on your car loan or lease and the actual cash value of your vehicle after a total loss. This can occur in the event of an accident or theft. If you have been in a car accident and your vehicle has sustained enough damage to be declared a total loss, you should file a gap insurance claim.

The first step is to find out if you have gap coverage and obtain the contact information for the gap provider. Gap insurance is not mandatory, and you may not have purchased this coverage. If you have confirmed that you have gap insurance, you should then contact the gap provider and inform them of the total loss to open a claim.

Once the claim is open, you will need to gather the required documents, which may include:

• Original purchase contract from the seller
• Copy of the gap policy contract
• Payment history ledger from the lienholder
• Police report
• Sales agreement
• Insurance settlement statement
• Settlement check
• Loan or lease contract
• Loan history

After you have gathered the necessary documents, submit them to the gap insurance provider. The claim process can take several weeks, depending on the circumstances of the accident or theft and the complexity of the case. The insurance company will determine the actual cash value of your vehicle and verify your loan or lease details before approving the claim and issuing a payout.

Documents required

To file for gap insurance, you will need to provide a range of documents to support your claim. The specific documents required may vary depending on your insurance provider and the circumstances of your claim, but here is a detailed list of the most commonly requested documents:

• Insurance Settlement Statement: This document outlines the vehicle's actual cash value and details how much your vehicle insurance company reimbursed you for the loss. It is essential to show the difference between the settlement amount and what you still owe on your loan or lease.
• Settlement Check: You will need to provide a copy of the settlement check issued by the vehicle insurance company to the lienholder or lessor. This check represents the payment made after processing your initial claim and includes the settlement amount.
• Loan or Lease Contract: The original contract detailing the financing terms of your loan or lease agreement is necessary to establish the validity of your claim. It outlines the financial commitments you have made regarding your vehicle.
• Loan History: A comprehensive loan history is required, listing all charges and payments made to your account. This document must include the current outstanding balance on your loan. It demonstrates your payment history and helps assess your claim.
• Police Report: In the event of theft, an accident, or vandalism, a copy of the police report is essential. It provides official documentation of the incident, including details such as the date and description of what happened to your vehicle.
• Sales Agreement: The original sales agreement from the dealer is required to show the purchase price of your vehicle. This document helps establish the value of the car at the time of purchase.
• Current Mailing Address and Daytime Contact Information: Your insurance provider will need your up-to-date contact details, including your mailing address and daytime phone number or alternative contact methods, to ensure efficient communication during the claims process.
• GAP Deficiency Waiver Addendum: This document is relevant if you have a GAP deficiency waiver as part of your insurance policy. It outlines the specific terms and conditions of the waiver, which may include details on how the insurance company will handle any shortfall between the settlement amount and your outstanding loan balance.
• Refund Amounts for Cancelable Items: If you have any cancelable items, such as credit life insurance, accident and health insurance, service contracts, or theft deterrent products, you will need to provide information on the refund amounts for these items. This is particularly relevant if these items were cancelled due to the insurance claim.
• Account Number and Payoff Address: To facilitate the claims process and any potential payouts, your insurance provider will need your account number and the payoff address associated with your loan or lease.
• Settlement Breakdown: A detailed breakdown of the insurance settlement is necessary to understand how the settlement amount was calculated. It should match the settlement check amount and provide transparency in the settlement process.
• Date and Cause of Loss: Providing documentation or information about the date and specific circumstances that led to the loss of your vehicle is crucial for the insurance company to assess your claim accurately.

Please note that the above list may not be exhaustive, and it is always advisable to contact your insurance provider directly to confirm the specific documents required for your gap insurance claim. They may request additional information or have unique requirements based on their policies and procedures.

How to file

Gap insurance, or guaranteed asset protection, covers the difference between the smaller amount of the actual or scheduled payoff balance owed and the value placed on your vehicle by the auto insurance carrier. It is important to note that gap insurance is not a requirement and is purchased voluntarily.

When to File for Gap Insurance

Gap insurance coverage is triggered in the event of a constructive total loss of your vehicle due to collision, fire, or an unrecoverable theft.

Depending on the provider, you may be able to file your gap insurance claim in person, over the phone, or online. If your vehicle is stolen or totaled, and your comprehensive car insurance or auto collision coverage claim is approved, then your gap insurer will pay your lienholder what is owed under your gap insurance policy.

Documents Required for Filing a Claim

When filing a gap insurance claim, you will need to provide the following documents:

• Insurance settlement statement: A statement showing the vehicle's actual cash value and how much the vehicle insurance company reimbursed you for the loss.
• Settlement check: A copy of the check paid to the lienholder/lessor from the vehicle insurance company after they process your claim, showing the settlement amount.
• Loan or lease contract: The original contract showing the financing terms of your loan or lease.
• Loan history: A complete list of the charges and payments that have been made to your account, including the current outstanding balance.
• Police report: A copy of the police report explaining what happened to the car and when.
• Sales agreement: The original sales agreement from the dealer showing how much you paid for the car.

Time Taken to Process a Claim

A gap insurance claim can take several weeks to process, depending on the circumstances of the accident or theft that led to the claim.

How long it takes

The length of time it takes to file for gap insurance can vary depending on several factors, including the state in which the claim is being filed and the complexity of the claim. Most insurers will pay out within 30 to 45 days of accepting a claim, with some stating that it can be as quick as one to two weeks. However, it is important to note that the time frame can also depend on the circumstances of the accident or theft that led to the claim.

The process of filing for gap insurance typically involves determining the actual cash value of the vehicle, verifying loan or lease details, and then receiving a payout from the gap insurance provider. This process can be done in person, over the phone, or online, depending on the provider. The payout from the gap insurance will go directly to the company that holds the car lease or loan to pay off the remaining balance.

To speed up the payout process, it is recommended to provide complete and accurate information, maintain open communication with the insurance company, and promptly respond to any requests for additional information. Additionally, submitting all the initial paperwork, such as police reports and car loan or lease documents, can help expedite the process.

It is worth noting that gap insurance typically covers only the difference between the actual cash value and the loan or lease balance at the time of a total loss. It does not cover other costs such as deductibles, extended warranties, service contracts, or aftermarket modifications.

Frequently asked questions