How to Get a GAP Insurance Refund From a Dealership

Guaranteed Asset Protection (GAP) insurance provides financial coverage for the difference between a vehicle’s actual cash value and the outstanding loan or lease balance if the vehicle is deemed a total loss due to theft or an accident. This coverage protects consumers from owing money on a car they can no longer drive. If circumstances change, such as paying off a loan early, selling the vehicle, or refinancing, a refund for the unused portion of a GAP insurance policy is possible.

Preparing Your Refund Request

To initiate a GAP insurance refund, prepare the necessary information and documents. You will need your original loan or lease agreement, the GAP insurance policy number, the exact date the qualifying event occurred (such as the car being paid off, sold, or refinanced), and the Vehicle Identification Number (VIN). For a refinance, new loan details are also required.

Gather your original purchase agreement and the GAP insurance contract, as these contain important policy terms. If you paid off your vehicle early, obtain a payoff letter from your lender confirming the loan’s zero balance and payoff date. If the vehicle was sold, obtain the bill of sale. These documents verify your eligibility for a refund and provide details for calculating the unused premium.

Initiating the Refund Process

With all necessary information and documents organized, you can formally request the refund. The point of contact for a GAP insurance refund depends on where the policy was originally purchased. If the GAP coverage was part of your auto loan agreement or purchased directly from the dealership, contact the dealership’s finance department or their GAP insurance administrator. If you acquired the policy from an independent insurance provider, that company will be the direct contact.

When making initial contact by phone, email, or certified mail, state your intention to cancel the GAP insurance and request a refund. Provide identifiers including your full name, the GAP policy number, the vehicle’s VIN, and the date of the qualifying event. Be prepared to follow instructions, which may include completing a refund request form. Submitting copies of your gathered documents, such as the loan payoff letter or bill of sale, will be required to support your claim. Maintain detailed records of all communications, including dates, names of representatives, and summaries of conversations, along with copies of all submitted documents.

Refund Processing and Resolution

Once the refund request is formally submitted, the provider will calculate the refund amount. GAP insurance refunds are calculated on a pro-rata basis, meaning you receive a portion of the premium back based on the unused coverage period. For example, if you paid for a 36-month policy and cancel after 20 months, you would be refunded for the remaining 16 months. Factors such as the original cost of the policy, the total term, and any administrative fees or cancellation charges can influence the final refund amount.

The timeline for receiving a GAP insurance refund can vary, ranging from four to eight weeks from the date the request is fully processed. Refunds are issued as a check mailed to your address or, in some cases, credited directly to your outstanding loan balance if one still exists. If the refund is not received within the expected timeframe, follow up with the party you initially contacted, providing your records of submission. If there are discrepancies in the refund amount or if the request is denied without clear justification, escalating the issue to a consumer protection agency or state insurance department may be necessary for further assistance.