Yes, gap insurance can deny a claim if the claim is for something that is not covered by your gap insurance policy or you’ve missed recent insurance payments. Gap insurance pays for the “gap” between a car’s actual cash value (ACV) and the remaining balance on a loan or lease if the car is stolen or totaled.
Examples of When Your Gap Insurance Claim May Be Denied
Your car only needs normal repairs.
Your vehicle has had a mechanical breakdown, such as an engine failure, but is not totaled. Gap insurance is only applicable if your car is considered a total loss. If you want coverage for engine failure or other breakdowns, you should consider purchasing mechanical breakdown insurance.
The policyholder did not make the necessary payments. For example, some insurers require you to keep making payments to your lender or lessor while the claim is being investigated.
You do not have the necessary documentation. You will likely need to have copies of the loan or lease contract, payment records, the vehicle sales agreement, and settlement details for any related claims.
You filed a claim to cover negative equity from a previous loan. Gap insurance will not cover loans that you have rolled over. It only covers the existing loan on the car that was stolen or totaled.
To make sure that your gap insurance claim is approved, check your policy details and follow any instructions from your gap insurance company. This will likely include sending in verifying documents such as a copy of any police report and your loan or lease contract.
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