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GAP Insurance - My Story


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9 replies to this topic

#1 Polaroy2

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Posted 23 April 2012 - 12:08 AM

Just thought I would put my experience in as I had never dealt with GAP insurance before. I learned A LOT when our Honda was totaled last month. Again, this is dealing with MY GAP ins. provider, and it may or may not be different with yours.

First things first:
What is GAP insurance?
GAP insurance, known as Guaranteed Asset Protection or Guaranteed Auto Protection, covers the difference of what you owe on your car loan vs. what the car is ACTUALLY worth. My insurance company called it ADV, or Actual Daily Value, what the car was worth on the actual day the accident happened.

GAP insurance is almost ALWAYS recommended when you buy a NEW vehicle. The minute you drive the car off the lot it loses %25-%30 of its value. It is no longer worth the $10K(generic number) you bought it for. It's now worth $7K. If you were to get in an accident, you car insurance would ONLY pay $7K, and it would be up to YOU to finance the rest. I hope you have an extra $3K laying around! Or you could continue making your monthly payments until the $3K is paid off. If you had GAP insurance, it would pay the dealership(or loan provider)the $3K.

GAP insurance is not always recommended on used cars because the used car MAY be worth more than the dealer selling price. It's up to you, the consumer, to verify. However the dealership may not tell you and STILL try to sell you GAP insurance.

What if I rolled over $5K(generic amount) from a trade-in. Does GAP insurance cover this amount?
MAYBE. I say this because it DEPENDS on the GAP Insurance provider and how much GAP insurance coverage they provide.

Everywhere I looked on the web stated GAP ins. DOES NOT cover ANY amount that is rolled over from another vehicle. However I found this to be untrue. This all DEPENDS on WHO the GAP ins. provider is and how MUCH they cover.

My story is as follows:(generic numbers used)

Traded in my truck with $5K rolled over into a new Honda, because I had negative equity in the truck. Basically they tacked on the $5K to the loan amount. So instead of owing $10K for the car, I owed $15K. I opted for the GAP insurance since it was a new car. Unknown to ME, the GAP Ins. provider was NOT in-house(Honda), it was a third party provider with whom Honda sent their business to. I did not find this out until after the accident happened, almost a year later.

One year later, after making all payments, car was totaled. Called my insurance provider, they got everything started with my claim and instructed me to contact the GAP provider so I could start the claim process with them. Again, I have never dealt with GAP insurance providers before. I contacted the dealership, as I had in-house financing and informed them I needed to start my GAP ins. claim. They informed me, to my surprise, that I needed to contact the GAP ins. provider to do this. After a few calls, I was able to get the number from the dealership and contacted the GAP insurance provider and got the ball rolling.

A few things I learned at this point:
  • YOU must start the GAP insurance claim process. It does NOT automatically start, they are not notified, and in fact they purposefully DON'T want to know. Why? Because there is a time period for the entire process to be finalized. If YOU FAIL to initiate the process and complete it during this time period, the GAP ins. provider says "oh well, your loss!". They don't pay the claim and YOU have to pay!
  • DEPENDING on the GAP ins. provider, they can cover %100, %125, OR %150 of the amount. So for a difference of $3K(owed vs. actual value) they may cover $3000(%100), $3750(%125) OR $4500(%150)
  • The GAP ins. provider has a LONG list of required items. This includes copies of: sales contract, GAP Insurance Amendment(GAP ins. contract), proof of payments(monthly payments), THE WINDOW STICKER!!!, pay-off check from your insurance company, address of insurance company agent, proof of how the insurance company came up with the actual value of the vehicle, and a long list of other items from the insurance company.

It's almost overwhelming! All of this had to be shipped to their claims office within a specified amount of time, OR they would not pay the claim. Fortunately for me, my insurance agent was VERY good and was able to get everything I needed to me within 2 days.

The bottom line to all this is that IF you buy a new vehicle and purchase GAP insurance, MAKE SURE that it will cover ANY ROLL-OVER amount from a previous vehicle! Fortunately for me, MY provider covered %150 of the owed amount, which covered my roll-over. Ask WHO the GAP ins. provider is and CALL them to find out what their coverages are.

On another note, I was amused to find that our Honda actually APPRECIATED in value by $1000!

Edited by Polaroy2, 23 April 2012 - 12:15 AM.




#2 AKAGeorgiaGirl

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Posted 23 April 2012 - 08:02 AM

Good points.

My first experience was due to a lack of gap insurance. Bought a new Taurus in 2000 (rolled over a used/upside down vehicle) and totaled it in early 2003. After the insurance payoff (value of vehicle less my $500 deductible) I owed about $5,000. Since the car was not the only thing injured in the accident, keeping up with the regular car payment really was not an option. (3 week hospital stay, months of physical therapy = lots of lost income.) Eventually I settled it, but really wish I'd known about gap insurance.

#3 road2freedom

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Posted 23 April 2012 - 08:46 AM

+1 always get GAP if you are buying new or used and not in a positive equity position. However, I would advise you to almost never get this through the dealer. Typically your insurance company sells GAP coverage at a fraction of what the dealer charges. Likewise, many CUs sell GAP and roll it into the loan. When I first started out I paid anywhere from $500-$700 for GAP. If the price is competitive, by all means take it, but do yourself a favor and shop around a bit.

Also, if you pay off the vehicle early or trade it in, remember to call the GAP provider to cancel the policy. You are typically eligible for a pro-rated refund.

#4 jst300z

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Posted 23 April 2012 - 10:14 AM

Not sure why people pay hundreds a year for this.

You can easily endorse your auto policy for less than $100/year (more like $40-$60 for an average car).

#5 road2freedom

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Posted 23 April 2012 - 10:49 AM

One other thought I had after the other post and the database errors started again... :aggressive:

If you can, pay cash for the coverage. The only thing worse than paying for insurance is paying interest on it.

#6 gamecockcountry

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Posted 23 April 2012 - 03:21 PM

Not sure why people pay hundreds a year for this.

You can easily endorse your auto policy for less than $100/year (more like $40-$60 for an average car).


Not all insurance companies offer it. I have insurance with State Farm and I have double checked with them during every vehicle purchase and they do not offer Gap. I believe they may have in the past.

#7 MarvBear

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Posted 23 April 2012 - 07:18 PM

full Question: Which insurance companies offer full Gap Insurance? I am currently insured with Progressive and they only offer partial Gap Insurance which only covers 25% of the cash value. I need to find an insurance company that offers full Gap Insurance. Any suggestions?


Not all GAP policies are created equal. Beware your dislike of dealers, that it does not have the potential to financially harm you because you believe you may save some money. From most of the comments in this thread, I see some that need to do a wee bit more homework, but then again, you know how prejudiced I am.

#8 mk_378

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Posted 23 April 2012 - 09:13 PM

It's essential to read the policy before buying. The bottom line is that some GAP covers rolled negative equity and some does not.

#9 jmedee

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Posted 24 April 2012 - 02:10 PM

Also remember if you ever refinance that vehicle - GAP coverage doesn't always roll over with the new loan. You might need a new GAP contract. Again, only learned this because I refinanced my van in 2003 and asked the newbie (there's the answer) if everything rolled over and she said YES! Three months later - drunk driver hits me head on. Totalled AstroVAN!

Wells Fargo wasn't going to pay - I called them every SINGLE days for 5 months until they PAID it off!! I also think because I was working for them at the time for 7 years also helped the situation.

#10 Polaroy2

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Posted 24 April 2012 - 07:42 PM


Not sure why people pay hundreds a year for this.

You can easily endorse your auto policy for less than $100/year (more like $40-$60 for an average car).


Not all insurance companies offer it. I have insurance with State Farm and I have double checked with them during every vehicle purchase and they do not offer Gap. I believe they may have in the past.

They have in the past. My first car purchase I was able to get GAP through State Farm. When I went to buy the Honda, the financing guy was arguing with me stating insurance companies never provided GAP insurance. I almost walked out on the deal because he was being such an ass about it.


full Question: Which insurance companies offer full Gap Insurance? I am currently insured with Progressive and they only offer partial Gap Insurance which only covers 25% of the cash value. I need to find an insurance company that offers full Gap Insurance. Any suggestions?


Not all GAP policies are created equal. Beware your dislike of dealers, that it does not have the potential to financially harm you because you believe you may save some money. From most of the comments in this thread, I see some that need to do a wee bit more homework, but then again, you know how prejudiced I am.

Always a good idea to do your homework!

It's essential to read the policy before buying. The bottom line is that some GAP covers rolled negative equity and some does not.

It doesn't specifically have to be a roll-over amount. The amount that GAP insurance covers depends on the provider(100/125/150), and the percentage covered isn't limited to JUST the negative equity. It will cover anything.

Edited by Polaroy2, 24 April 2012 - 07:43 PM.





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