What Is a GAP Insurance Refund?

Guaranteed Asset Protection, also known as GAP waiver or GAP insurance, is an add-on coverage from a lender or third-party insurer, separate from your liability or collision insurance. It protects you from owing the difference between what the car is worth and what insurance pays out if the vehicle is totaled or stolen. You can think of it as covering the “gap” between your car’s actual cash value and the balance of your loan. 

‍

If you have paid your loan off early, such as through auto loan refinancing, or canceled your policy you may be eligible for GAP insurance refund. Here’s how it works — and how to claim it.

‍

Key takeaways

‍

• You can cancel GAP insurance if you no longer need it, for instance if you refinanced your auto loan or sold the car.
• You may be able to claim a GAP insurance refund if you cancel your coverage before the policy expires.
• GAP insurance does not automatically transfer to a new loan when you refinance, so it’s worth considering other ways to add GAP coverage on your new loan.

‍

Can you cancel GAP insurance?

‍

Yes, you can cancel GAP insurance. 

‍

If you no longer need GAP coverage, perhaps because your loan is paid off or you’re refinancing, then it makes sense to cancel it. After all, if there’s no financial gap left to cover, you won’t need the coverage. 

‍

If you prepaid for GAP insurance or still have months remaining on your contract, you may be eligible for a GAP insurance refund as well. The refund would be pro-rated to account for the unused portion of your premiums. You wouldn’t be able to request a refund if your car was totaled and you made a claim on the policy.

‍

How to get a GAP insurance refund

‍

To request a GAP insurance refund, you’ll need to reach out to the GAP provider. Follow these steps:

‍

• Review your GAP insurance contract to find out if there are any cutoffs or deadlines for canceling the coverage. You can usually cancel at any point before the policy expires, but you should check your policy documents to be sure.
• Contact the provider that issued you the GAP coverage to cancel the coverage and request a refund of the unused portion. 
• They’ll inform you of the specific process to follow, which will likely include a form you’ll need to fill out and return.
• If required, submit documentation, such as an odometer reading or a payoff notice indicating when your loan was paid off.

‍

For the smoothest refund, make sure you meet the provider’s timeline and documentation requirements.

‍

Does GAP insurance transfer when you refinance?

‍

You generally can’t keep or transfer your GAP insurance after you refinance. GAP coverage is tied to the loan, not the vehicle. If you refinance, you should cancel your old GAP insurance and consider protection for your new loan.

‍

Refinancing with GAP coverage ensures that you’re still protected if there’s a gap between your car’s actual cash value (ACV) and the payoff amount of your refinance loan. If your car is stolen or deemed a total loss after a claim, this protection helps you avoid having to pay on a loan for a car you can’t drive anymore. 

‍

Secure GAP coverage during your refinance

‍

One of the easiest ways to protect yourself is to choose a refinance loan with a GAP waiver. This protection waives the difference between the loan amount and the vehicle’s ACV, so you won’t have to worry about paying it if your car is stolen or totaled.

‍

When you refinance with RefiJet, a GAP waiver can be rolled into your new loan, providing peace of mind that you’ll be protected should something happen to your vehicle when your loan balance is higher than the value of the car. Learn what RefiJet’s Guaranteed Asset Protection (GAP) includes and whether you should include it in your auto refinance.

‍

FAQs

‍

Below are some of the most frequently asked questions about getting a GAP insurance refund.

‍

Is a GAP insurance refund automatic if I pay off my car early?

‍

No, you won’t automatically receive a refund on your GAP insurance if you pay off your auto loan early. You’ll need to let your GAP provider know you’ve paid off the car and provide documentation of the payoff.

‍

What qualifies you for a GAP insurance refund?

‍

You may be eligible for a GAP insurance refund if you paid for the policy upfront and later sold or refinanced the car. If you signed up for monthly payments and still have time remaining on your policy, you might qualify for a refund of the portion of the policy you haven’t used.

‍

How do you get a GAP insurance refund after refinancing?

‍

Since refunds on GAP insurance aren’t automatic, your first step is to reach out to your GAP provider. Ask them what process to follow and forms to fill out to secure a refund on the rest of your GAP policy.

‍

What happens if you never use your GAP insurance?

‍

If you never use your GAP coverage, it’s probably a good thing — it means your car was never totaled or stolen. It will expire at the end of the contract term, or you can cancel it early. Canceling it may mean you’re entitled to a refund for the remaining coverage.

‍