Canceling your car’s gap coverage is very easy. Chances are that you will have to seek out your gap insurance refund yourself, although some lenders will let you know you have this refund coming to you. Fox Business: What Gap Insurance Does – and Does Not – Cover. Read your policy documents to find out how to cancel your gap insurance. In car terms, gap insurance is actually an acronym that stands for “guaranteed asset protection.” If your car is totaled, Here’s a simple example. They can last anywhere from 1 year up to 10 years depending on what you select. The gap insurance company will refund any premium that was overpaid. There comes a time when you don’t need gap insurance for your car anymore, though. Gap coverage is not required by law. It depends on the remaining amount in the loan. Did you pay-off your existing auto loan early? The insurance provider will cancel your insurance policy and issue a refund, usually in the form of a check, for the remainder of your gap insurance coverage. If you purchased gap insurance through your lender and then sell or refinance the car, the policy will cancel automatically when you pay off the loan and you may receive a prorated refund within a few weeks of completing the sale. You'll merely need to show proof that you've paid off the loan, then ask for the refund of all premiums due. Gap insurance refunds are only for unused portions of a gap insurance premium, and filing a claim means that you used your gap insurance coverage. But with GAP insurance, this is meant to be used in conjunction with the other car insurance. What did the insurer promise to do if you paid off your loan early? A Guaranteed Auto Protection, otherwise known as GAP insurance, is similar to car insurance. When the time comes where you no longer need it, make sure to cancel and get as big of a refund as possible. In many cases, it can take from between 4 to 6 weeks to get your refund back. All you have to do is call the company providing the coverage and tell them you’d like to cancel. If the car’s value is $15,000, then there’s nothing left for gap coverage to cover. When you purchase a new car, its value drops an estimated 11 percent as soon as you drive it off the lot. How Refunds work Well 99% of all cancellations are factored using the theory of proration. Quantity would differ. … The gap insurance company will refund any premium that was overpaid. Then, buy a new gap insurance policy from your regular insurance company. If you live in Alabama, Colorado, Indiana, Iowa, Maryland, Massachusetts, Oklahoma, Oregon or South Carolina, your state requires insurers to refund the premiums. * Refund for Cancellable Products Here’s how gap insurance works: Let’s say your auto loan is for $25,000. At that point you’ll want to cancel the insurance, and try to get as much of a refund as possible. Amounts which may not be included in the GAP waiver. Read on to find out how. 2  While optional, the insurance may be required if you’re financing your vehicle through a bank or credit union. If you paid the car off at the end of 24 months, you would have 12 months remaining, which means a refund of $333.36 for the time you didn't use the coverage. But if, like many car buyers, you pay off your vehicle within the first years of ownership, you won't need that gap insurance anymore. You will need to gather a few items to obtain your gap insurance refund. If you cancel in the first few months, that refund will often be in full. The fastest way to get your money back from your gap insurance refund on a traded in car. Some policies cover the insurance deductible. If the car is totaled or stolen, your traditional auto insurance policy will only pay $21,000 -- leaving you scrambling for $4,000 to pay off the loan. If you have purchased a Gap Insurance policy from Total Loss Gap, can you cancel and obtain a refund? Find out today if you're owed a refund for free! It's important to pay close attention to the insurer's refund policy before signing up for gap insurance. Include a salutation at the end of the letter. Refund & Cancellation Policy All of our policies come with a 30-day cooling off period. The Salutation. Let’s say you buy a new car for $30,000 with no money down. A lot of times you can get a refund when you cancel your gap coverage. Six months later, the car’s value has dropped to $21,000. Helping auto consumers receive prorated refunds for auto warranties, gap insurance, maintenance plans, tire and wheel protection, and more. 3  But there will come a point when you no longer need gap insurance coverage. GAP insurance has become an option in recent years when you purchase a new car from the dealer. Amounts which may not be included in the GAP waiver. The acronym GAP stands for Guaranteed Auto Protection. GAP Deficiency Waiver Addendum Financing contract (loan or lease agreement) Refund amounts for any cancelable items such as credit life insurance, accident and health insurance, service contracts, theft deterrent products, and GAP if cancelable due to the claim. Compare to find out in 45 seconds. GAP insurance is most commonly purchased when you are buying a vehicle at a car dealership. Get the odometer statement. The gap insurance refund payment is determined by how early you pay off the loan. How to Cancel Gap Insurance and Get a Refund, Most people who buy a new car end up purchasing. GAP insurance covers a total loss to a vehicle in the event of fire, theft, vandalism, flood, accident, tornadoes, or hurricanes. Hopefully this helps you ppl. When you are in an accident or there is another event that causes so much damage to your vehicle that it needs to be replaced, having GAP insurance refund can come in really handy. There are a few reasons why you might not need gap coverage anymore, but the most common one is when you’ve paid off enough of your car that you no longer owe more than the value of the car. The first step once you've paid off your vehicle in full is to review your policy. You’ll need to contact the insurance company that the dealership works with, and you’ll probably need to have a replacement gap lease or loan policy up and running before canceling. Gap coverage is usually provided by one of three sources: A lot of times you can get a refund when you cancel your gap coverage. Getting a refund is also quite easy. This will ensure that there is no question about the intent to cancel the policy. Gap insurance serves a valuable purpose, but it's important to make sure you aren't paying for a service you don't need. Depending on your car, the price you paid, and your interest … Gap insurance is an insurance coverage option that covers the gap between what you owe on your car loan and what your vehicle is worth. 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