Could someone clarify GAP insurance for me? I recently had an accident where my car was deemed a total loss. After sorting out the paperwork and receiving payment from my insurance for the car’s value, the GAP insurance is now saying they won’t cover the remaining balance on my loan because the vehicle had previous damage. What gives?
Can someone explain GAP insurance please?
GAP insurance, or Guaranteed Asset Protection insurance, is intended to cover the difference between what you owe on your car loan and the actual cash value (ACV) of your vehicle in the event that it’s totaled. So, if your car is declared a total loss and the insurance payout does not cover the remaining balance of your loan, GAP insurance can help cover that gap.
In your situation, it sounds like your GAP insurer is refusing to cover the remaining loan balance because they are citing prior damage to the vehicle. This can sometimes happen, as insurers may determine that prior damage affects the vehicle’s value, potentially impacting the coverage under your GAP policy.
It’s important to thoroughly review the terms of your GAP insurance policy, as well as any documentation related to the prior damage. Here are a few steps you can take:
Contact your GAP insurance provider: Ask for a detailed explanation of their decision and what documentation they used to justify it.
Review your policy: Check the specific terms regarding prior damage and exclusions, and see if anything might contradict their reasoning.
Gather documentation: If you believe the prior damage should not affect your claim, gather any relevant documentation, such as repair records or a valuation from a third-party expert.
Appeal the decision: If you believe the denial is unjustified, consider filing an appeal with the insurance company.
Seek legal advice: If necessary, it might be helpful to consult with a legal expert in insurance claims to explore your options.
Remember to keep detailed records of all communications with your insurance and GAP providers. Good luck, and I hope you can find resolution to this issue!