Alyssa Lane
Removing gap insurance from a loan is a straightforward process. Gap insurance covers the difference between the actual cash value of a car and the loan amount in the event of a total loss. While it can be useful, it's not mandatory and can be cancelled at any time. To do so, contact your insurance provider or dealership and request a cancellation. You may need to sign a form and provide relevant documentation. You may also be eligible for a refund, depending on the terms of your contract. It's important to review the policy carefully and understand any cancellation fees or coverage gaps before making a decision.
| Characteristics | Values |
|---|---|
| When to remove gap insurance | When the loan is less than the car's value |
| Who to contact to remove gap insurance | The company providing coverage, such as the dealership or your insurer |
| How to remove gap insurance | By phone, online, or by submitting a written request |
| What to do before removing gap insurance | Ensure you have alternate coverage in place |
| What to do after removing gap insurance | You may receive a refund |
What You'll Learn
Contact the company providing coverage
To remove gap insurance from your loan, you'll need to contact the company providing coverage. This could be the dealership where you bought your car or your insurer. If you're cancelling coverage purchased through a dealership, you'll need to contact them directly and may be required to sign a cancellation form and other documents. If you have coverage through your insurance company, you can typically call or go online to remove gap coverage from your policy.
Contact the Dealership:
- Locate your vehicle purchase agreement: Ensure you have copies of the paperwork you signed when purchasing the car. If you can't find them, contact the dealership and request duplicates. Getting electronic copies can save time.
- Reach out to the dealership's insurance provider: Ask them about the steps required to cancel your gap policy. They may need written notice of your cancellation, which you can usually provide via email or fax.
- Provide your current contact information: Ensure the dealership's insurance company has your updated address. This will ensure that any refund cheque is sent to the correct address.
- Sign and return any required paperwork promptly: Get all the necessary documents signed and returned as soon as possible to expedite the cancellation process.
Contact Your Insurer:
- Call or go online: Most insurance companies allow you to remove gap coverage by calling their customer service line or accessing your policy online.
- Be prepared to provide information and documents: Your insurance company may request proof that your vehicle was sold, traded, or paid off, as well as verification of your car's current mileage.
- Complete any necessary forms: Fill out and submit any documentation required by your insurance company to finalise the cancellation.
Remember, it's essential to have a new insurance policy in place before cancelling your existing gap coverage to ensure continuous protection for your vehicle. Additionally, keep in mind that you may be eligible for a refund for any unused portion of your gap insurance coverage.
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Cancelling gap insurance from a dealership
Gap insurance is an extension of your auto insurance that covers the difference between the actual cash value of your car and what you owe on your loan. It is usually required by your lender when you buy a new car to cover the immediate depreciation in value. However, you don't have to buy gap insurance from the dealership, and you can cancel it at any time.
If you decide to cancel gap insurance purchased through a dealership, you should contact the dealership or coverage provider directly. You may need to sign a cancellation form and other documents. Here are the steps you can take to cancel gap insurance from a dealership:
- Check your contract: Review the terms and conditions of your gap insurance policy, including any cancellation fees that may apply. Make sure gap insurance is not required as part of your car loan or lease contract.
- Gather your information: Before initiating the cancellation, gather your policy details, loan or lease documents, and, if applicable, your new gap insurance policy information if you are switching providers.
- Contact the dealership or their insurance provider: Ask about the steps required to cancel your gap insurance policy. They may provide you with a cancellation form to fill out or require a written request that includes your name, address, and vehicle identification number (VIN).
- Make any necessary payments: Ensure you make any overdue payments, including interest that may have accrued. Be prepared for any cancellation fees that may apply.
- Request a refund: If you paid for your gap insurance upfront, you may be eligible for a refund for the unused portion of your coverage. Contact the insurance company and inquire about their refund process.
It's important to note that if your car is financed and gap insurance is required, make sure you have a replacement policy in place before cancelling the existing one to avoid any gaps in coverage. Additionally, purchasing gap insurance through your auto insurer is typically cheaper than through a dealership.
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Cancelling gap insurance from an insurance company
Gap insurance covers the difference between what you owe on your car loan or lease and the depreciated value of your car if it is written off due to a problem covered by your policy, such as a car accident. It is an optional extra on top of your regular car insurance, and you do not have to buy it from the same company that provides your main car insurance.
If you have decided that you no longer need gap insurance, you can cancel it at any time. However, you may be charged a cancellation fee, so it is worth checking the terms and conditions of your policy before you cancel. Some insurers will charge up to 50% of your premium if you cancel within 60 days, while others charge as little as 25% or nothing at all. You may also need to sign a cancellation form and other documents.
To cancel your gap insurance, contact the company providing coverage. If you bought your gap insurance through a dealership, contact them or the coverage provider directly. You may be able to cancel online, but this option is usually only available if you bought your insurance directly from an insurance company.
If you have paid for your gap insurance upfront, you may be able to get a refund for any months of coverage you have already paid for but will not use. However, you will not be eligible for a refund if your policy has expired or if there is a deadline by which you must claim a refund, as detailed in your policy.
To get a refund, contact your gap insurance provider and ask them to cancel your policy and issue a refund for any unused coverage. You may need to provide information and documents, such as proof that your vehicle has been sold, traded in, or paid off, and verification of your car's current mileage. You may also need to fill out and submit forms or other documentation to complete the cancellation.
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Getting a refund for gap insurance
Gap insurance covers the difference between what you owe on your car loan or lease and the depreciated value of your car if it is written off due to an accident or another problem covered by your policy. It is sometimes called loan/lease coverage.
Gap insurance is usually required by your lender when you buy a new car because a new vehicle can lose as much as 20-30% of its overall value in the first year, whereas your loan balance may not decrease at the same rate.
If you pay upfront for gap insurance and then pay off your loan early, you can get a refund for the unused portion of the policy. The same applies if you sell or trade in your vehicle before the end of the policy period.
How to get a refund
To get a refund for gap insurance, follow these steps:
- Switch to a different insurance company: If you are switching providers, make sure you have a new policy in place before you cancel your existing one, to ensure there is no lapse in your vehicle's coverage.
- Contact your gap insurance company: Ask them to cancel your policy and issue a refund for the unused coverage.
- Provide information and documents: You may need to provide documents such as proof that your vehicle was sold, traded in or paid off, and verification of your car's current mileage.
- Fill out any necessary forms: Complete and submit any documentation your insurance company requires to process the cancellation and refund.
The typical gap insurance refund payout is within 30 days, but this can vary depending on the company and state regulations.
How to calculate your refund
The amount of your refund will depend on the cost of your premium and how long is left on your policy. Most policies cover 12 months and are paid annually. For example, if you paid a $60 annual premium in early January and want to cancel in late April, you will likely qualify for a refund of around $40, equating to eight months of unused coverage.
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Reasons to cancel gap insurance
Gap insurance is an extension of your auto insurance that covers the difference between the actual cash value of the car and what you owe on the loan. It is designed to help cover the cost of a vehicle in the event of a total loss. However, there are several reasons why you may want to cancel your gap insurance:
You owe less on your auto loan
Once you owe less on your car loan than the car is worth, you generally don't need gap insurance. Gap insurance is intended to cover the "gap" between the value of your car and the amount you owe on it. Over time, as you pay off your loan, this gap decreases, and you may eventually reach a point where the gap is small enough that you feel comfortable dropping the extra coverage.
To switch coverage providers
You may find a better deal on gap insurance from a different provider. In this case, you can cancel your current policy and switch to the new provider. This could save you money without sacrificing the peace of mind that comes with having gap insurance.
You're selling or trading your car
If you sell or trade in your car, you will no longer need gap insurance for that vehicle. Cancelling your gap insurance and getting a refund for the remaining coverage can help offset the cost of your new vehicle.
You paid off your loan early
If you pay off your car loan early, you may be eligible for a partial refund for the gap coverage that you haven't used yet. This can help you recoup some of the costs of your insurance, especially if you paid for your coverage in a lump sum.
You no longer need or want it
Your circumstances may change, and you may simply decide that you no longer need or want gap insurance. In this case, you can cancel your policy and request a refund for any unused portion of your coverage.
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Frequently asked questions
To remove gap insurance from your loan, contact the company providing coverage, such as the dealership where you bought your car or your insurer. If you are cancelling coverage purchased through a dealership, contact them directly. You may need to sign a cancellation form and other documents. If your coverage is through your insurance company, you can typically call or go online to remove gap coverage from your policy.
Yes, you may be able to get a refund for your gap insurance. This will depend on the terms of your contract and the reason for cancellation. Reasons for cancellation could include no longer needing the insurance, changing insurance companies, paying off your loan, or selling your vehicle.
The time it takes to get a refund for gap insurance varies. It can take anywhere from a few days to several weeks. The typical gap insurance refund payout is within 30 days but can depend on the company and state regulations.
Gap insurance, or guaranteed asset protection, is an optional coverage that pays the difference between what your vehicle is worth and how much you owe on your car loan at the time it is stolen or totaled. This type of insurance is only necessary if you lease a vehicle or have a loan.
