Author: Landyn Gautreau
Guaranteed Asset Protection Insurance (GAP) Insurance, is a type of auto insurance that covers the difference between the amount you owe for your car and the amount your car is worth.
For example, if you have a car loan of $18,000 and the blue book value of your car is $14,000, you would receive $14,000 from your insurance company if your car is totaled. This means you’ll still be responsible for paying an additional $4,000 due on the loan. Gap insurance is intended to protect you in this situation. If you owe more than your car is worth, it’s a good idea to have this type of insurance.
Reasons Why Gap Insurance Claims Are Denied
While gap insurance offers important protection for vehicle owners, it’s also a relatively narrow type of insurance and there are a variety of reasons it can be denied. This can be a point of frustration, so we thought it’d be helpful to talk through some of the reasons these claims are denied to help you determine whether this insurance is right for you. It can also help to ensure that you’re prepared to get the payment you’re entitled to if you ever have to file a claim.
With that in mind, here are some of the most common reasons gap claims are denied:
- The car is not considered a total loss. Gap insurance only pays out when the car is considered a total loss and your primary auto insurance pays out a claim for the value of the car. If the car is simply damaged or needs repairs but is not considered a total loss, your gap insurance claim will be denied.
- You have missed policy payments. If your policy has lapsed or you’ve fallen behind on payments, your claim could be denied. Some companies require you to make payments while your claim is being processed, so it’s important to be familiar with the terms of your policy and to make sure that all payments are current.
- You don’t have the proper documentation. When you file a gap claim, you should provide your insurance company with a copy of your purchase agreement, the loan or lease contract, documentation of loan payments, and settlement documents from all insurance claims on the vehicle.
- You have rolled over the loan. Gap insurance will only cover the amount of the original loan that was insured by the Gap policy. It will not cover additional or rolled-over loan amounts.
- Your auto insurance did not pay out. If your primary auto insurance did not pay for the vehicle loss, your gap claim will also be denied. This can happen if the insured is found to be negligent – for example, driving under the influence – or if the vehicle is being used for purposes the policy doesn’t cover.
Contact Us With Questions or to Learn More
Insurance companies can be difficult to deal with and are an ongoing source of frustration for our clients. If you have questions about what policy is right for you, how to ensure you get the amount you deserve, or specific terms of your auto insurance policies, the Saunders & Chabert team can help. We’re experienced in different types of insurance policies, common issues that individuals experience, and the best ways to avoid these issues.
In addition, if you think your claim has been wrongly denied, we can help. We’ll review your policy and give our advice on the next steps to make sure you get the payments you deserve.