Gap Auto Insurance: Getting Your Refund

Guaranteed auto protection (GAP) insurance is an insurance policy that provides reimbursement if your car is totaled or stolen and you still owe money on your car loan. If you cancel your GAP insurance policy early, you may qualify for a refund. This usually occurs after you repay your loan, or if you sell or trade in your vehicle before paying off your loan. To get a refund, you must have paid for the GAP insurance upfront. If you paid monthly, you may still get a refund, but it will likely be much smaller. The amount of your refund will depend on the value of the vehicle, the amount of the auto loan, the vehicle's current mileage, and the loan repayment term.

When to expect a refund

The timing of your refund depends on your insurance provider, but you can expect to receive your refund within a few weeks or about a month. The typical gap insurance refund payout is within 30 days, but it can vary by company and state regulations.

You can receive a refund if you pay off your auto loan early, but if you pay it off on schedule, you may not qualify for a refund. If your vehicle is stolen or becomes totalled and is no longer drivable, you might not qualify for a refund. Instead, you may need to use the policy to cover your losses.

You can get a gap insurance refund after a total loss, but only if you don't file a gap insurance claim. If your car insurance payout covers the loan balance in full and you don't need to use the gap insurance, you can then cancel the policy and request a refund.

If you bought your gap insurance from a dealership, the process should be much the same. The insurance company that works with the dealership will process your refund, as long as you are entitled to one.

When you won't get a refund

You won't get a refund on your GAP insurance policy in the following scenarios:

• Your policy has expired.
• The deadline by which you must formally make a claim has expired (as detailed in your policy).
• You have not paid your gap policy premium.
• Your vehicle gets totalled or stolen and you file a GAP insurance claim. It doesn't matter how long the policy has been active or how much money you borrowed.
• You haven't paid the full premium in advance and aren't owed a refund.
• You pay off your loan on schedule.

In addition, you should be aware that you can't get a GAP insurance refund after a total loss if you filed a claim against the policy. However, if you received enough from your car insurance to pay off your loan and don't need to file a GAP insurance claim, you may be able to get a refund.

How to request a refund

To request a refund on your GAP insurance, you must meet certain criteria. You need to have paid for the coverage in advance and not filed a claim against the policy. Additionally, your policy should not have expired, and the deadline for making a claim should not have passed.

If you meet these criteria, you can request a refund by following these steps:

• Contact your insurance provider and inform them that you want to cancel your GAP insurance and get a refund for the remaining coverage. It is recommended that you do this after your car is legally sold, traded, or your loan is paid off.
• Gather and submit any relevant documentation or forms required by your insurance provider to process the cancellation and refund. This may include proof of the sale, trade, or payoff of your vehicle, as well as verification of your car's current mileage.
• Be prepared to provide additional information or documents if requested by your insurance company.
• Specify that you want a refund for the unused GAP insurance coverage to ensure there is no confusion.
• Choose your preferred method of receiving the refund, such as a physical check or direct deposit to your bank account.

The time it takes to receive your GAP insurance refund may vary, but it typically takes between four and six weeks. It is important to note that you need to actively request a refund, as most insurance companies will not offer them automatically.

How much you'll get back

The amount of money you'll get back from a gap insurance refund depends on several factors. Firstly, it depends on how you paid for your policy. If you paid for your gap insurance upfront as a lump sum, you will get back any unused premium. However, if you pay monthly, your refund will be much smaller, or there may be no refund at all.

The amount of your refund may also depend on the loan amount, the mileage and value of the vehicle, and other factors. For example, if you paid $1,000 for a policy valid for 36 months and repaid your vehicle loan in full after 20 months, you would get a refund from your gap insurance provider for the 16 months remaining in the policy term, which would be roughly $444.

To calculate how much of a refund you'll get if you paid for the GAP policy upfront, you divide the total cost of the insurance by the number of months you had coverage—this gives you your monthly premium. Once you know the monthly premium, you can multiply it by the number of months you have left on your policy. That number should give you a good indication of how much your refund should be, but all insurance providers have different processes, so you'll need to confirm the amount of your refund with them.

It's important to note that you won't get a refund if you have filed a claim against the policy or if your policy has expired. Additionally, some insurers may charge a cancellation fee, so it's important to review the terms and conditions of your policy before cancelling.

How long it takes to process

The time it takes to process a refund on gap auto insurance depends on the insurance provider and state regulations. According to Mark Friedlander, a spokesman for the Insurance Information Institute, the typical gap insurance refund payout is within 30 days. However, it's important to note that this timeframe can vary by company and state. Therefore, it is recommended to ask your insurance agent about the expected timeline for receiving the refund.

The process of obtaining a refund on gap auto insurance involves several steps, including contacting the insurance company, providing the necessary documentation, and completing any required paperwork. The insurance company will then review your request and process the refund accordingly. It's worth noting that the refund amount will depend on factors such as the cost of the gap insurance premium and the remaining duration of the policy.

To ensure a smooth and timely refund process, it is advisable to have all the necessary information and documents readily available when contacting your insurance company. These may include proof of vehicle sale, trade-in, or payoff, as well as verification of the car's current mileage. By being prepared and proactive, you can help expedite the refund process and receive your money back within a reasonable timeframe.

Frequently asked questions