How to File a GAP Insurance Claim: A Step-by-Step Guide

If your vehicle gets totaled or stolen and you owe more than it’s worth, GAP insurance can cover the difference. But how exactly do you go about filing a GAP claim to get your payout? This guide explains the typical GAP claims process step-by-step.

What is GAP Insurance?

GAP insurance pays the gap between what your auto insurance pays if your vehicle is totaled (actual cash value) and what you still owe on your loan or lease. For example:

  • You owe $15,000 still on your car loan
  • Your vehicle gets totaled and is worth $10,000
  • Your auto insurer pays $10,000
  • GAP insurance pays the $5,000 difference

Without GAP protection, you’d be stuck paying a loan balance for a car you no longer have. GAP is optional but highly recommended for new cars or vehicles with high loan-to-value ratios.

When Can I File a GAP Claim?

In most cases, the following two things must happen before you can file a GAP claim:

  1. Your auto insurer declares your vehicle a total loss. This typically happens when repair costs exceed a percentage of the car’s actual cash value, usually around 75-80%.

  2. Your primary auto insurance claim is settled. Your insurer has paid you the ACV of your totaled vehicle.

At this point there is a “gap” between what insurance paid and what you still owe the financier, allowing you to file a GAP claim.

Who Files the GAP Claim – You or the Lender?

In most cases, your auto loan lender or lease company will file the GAP claim for you. Here’s why:

  • They are listed as payee or co-payee on the GAP policy.

  • They have a vested interest in getting repaid for the remaining loan balance.

  • They have all the necessary documentation like loan/lease agreements.

So once your primary auto insurance claim settles, the lender files a claim with the GAP insurer to cover their loss. You typically don’t have to do anything.

However, you may need to file a GAP claim yourself if:

  • You paid for GAP outside of your loan or lease agreement, like through your own insurer.

  • Your loan is through a private party instead of a financing company.

  • Your lender goes out of business or otherwise fails to file a claim.

  • You need to file a claim for anything besides the finance payoff amount, like deductibles or fees.

So check your GAP policy to confirm claims handling procedures. But in most scenarios, expect the lender to take care of it.

What Information is Needed to File a GAP Claim?

GAP claims require documentation to prove your car was totaled, its value, loan balance, and primary insurance settlement amount.

Documents needed typically include:

  • Police accident report (if applicable)
  • Primary insurance settlement letter
  • Vehicle valuation report
  • Loan or lease agreement
  • Loan payoff amount from lender
  • Proof of GAP coverage and deductible amount
  • Copy of title or registration

Your lender has most of these documents already. If you must file the GAP claim yourself, request copies from your auto insurer, lender, and any other applicable parties.

Step-by-Step Guide to Filing a GAP Claim

Follow this step-by-step process if you need to file a GAP insurance claim yourself:

  1. Notify your GAP insurer of the total loss. Call or visit their website to start a claim. Provide basic details about what happened.

  2. Gather all necessary claim documents. See list above. Make copies and also request originals.

  3. Submit the claim and documentation. Send copies first to get the claims process started. The insurer will request any original documents needed to verify figures.

  4. Cooperate with the GAP insurer’s investigation. Respond to any additional requests for documents or details promptly.

  5. Accept the claim settlement offer. Review the calculation and payout details carefully. Ask the insurer to correct any discrepancies before accepting.

  6. Receive claim payout. The GAP insurer will mail a check or make an electronic funds transfer to your lender to cover the remaining loan balance.

  7. Pay your deductible (if applicable). Some GAP plans have a deductible up to $1,000 that you must pay out-of-pocket before the claim is finalized.

  8. Get written confirmation of debt payoff. Your lender will send documentation that your auto loan balance is paid in full. Keep this for tax purposes if needed.

Tips for Smooth GAP Claims Handling

To avoid issues or delays with your GAP claim:

  • Review your policy so you understand the claims process.

  • Notify your insurer right away after your primary claim settles.

  • Send legible, well-organized documentation. Highlight important figures.

  • Make copies of everything before sending originals.

  • Follow up with the insurer frequently on claim status.

  • Don’t miss any deadlines to send requested materials.

  • Understand how the settlement is calculated before accepting.

  • Contact your state insurance department if you dispute the settlement.

  • Consult a public adjuster or attorney if the insurer denies your claim.

What is Covered Under GAP Insurance?

The basic purpose of GAP insurance is to pay the difference between your vehicle’s ACV and remaining loan balance. But other costs may also be reimbursable:

  • Insurance deductible for total loss – Covers your collision or comprehensive deductible required on the primary claim.

  • Sales tax on replacement vehicle – Applies if you purchase a new replacement car.

  • Fees for early lease termination – Pays your early termination fee if leasing.

  • Finance charges – Covers some interest charges for the remainder of your loan term.

  • Registration, title, and tag transfer fees

Check your specific GAP policy, as reimbursements vary by plan. Extra coverages like this must be added to your basic GAP coverage.

Key Takeaways

  • GAP insurance covers the gap between ACV and remaining loan balance if your vehicle is totaled.

  • In most cases, your auto lender files the GAP claim for you after the primary insurance settlement.

  • You may need to file a GAP claim yourself in certain situations. Gather all required documentation.

  • Follow up frequently with the GAP insurer during the claims process to avoid delays.

  • Make sure you understand how the claim payment amount is calculated.

  • GAP insurance may reimburse more than just the finance payoff amount depending on your coverage.

Understanding the GAP claims process helps ensure you get your full payout smoothly in the event of a total loss. Consult your agent or insurer if you have any questions about filing a GAP claim.

How to make a Gap Insurance claim


How do I claim unused gap insurance?

Start the refund process by contacting your insurance provider. Tell them your name, policy number, and that you want to cancel your GAP insurance and get a refund for the remaining coverage. Remember, don’t do this until after your car is legally sold or traded or your loan is officially paid off.

Why didn t my gap insurance pay off loan?

It’s possible this gap payout wouldn’t cover the whole loan if your car had depreciated significantly. Gap insurance wouldn’t pay out if your car was damaged but it wasn’t declared a total loss.

Why would Gap deny a claim?

Gap insurance companies can deny a claim for a variety of reasons. The most common reasons are a loss that isn’t covered by the policy or that the policy has lapsed. Gap insurance only pays in one situation: After an accident, your car is a total loss and you owe more than it’s worth.

Does gap insurance cover past due balance?

Gap insurance doesn’t cover missed or late payment fees, repossessions, extended warranty costs or car repairs…just loan balances.

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