Gap insurance claims are how insured drivers get a payout for the difference between their car’s loan or lease balance and its actual cash value (ACV) after a total loss. To file a gap insurance claim, drivers must contact their insurer and provide documentation showing the car’s value and its coverage details. Depending on the insurance company, you might be able to file a gap insurance claim in person, over the phone, or online.
What You Need for a Gap Insurance Claim
Copy of your original gap contract – available from your gap insurance provider
Original sales agreement – available from the dealership where you got your car
Manufacturer’s invoice or other document showing the vehicle’s original value – available from the dealership
Financing contract for the lease or loan – available from the dealership, bank, or credit union that holds your lease or loan
Payment history for the lease or loan – available from the dealership, bank, or credit union
Valuation report – available from your standard insurance company
Copy of the check from the insurer paying for the total loss – available from your standard insurance company
Insurance settlement statement breaking down the amount on the check – available from your standard insurance company
Police report – available from your local authorities
Although these documents are frequently required, every insurer has slightly different instructions for filing a gap claim. Most providers include lists on their websites, and you can always call or email your gap insurer to verify that you have everything you need. In addition, make sure that your gap insurance provider has your current contact information.
Most gap insurers will send a check, usually directly to the auto lease or loan provider, within four to six weeks if your claim is accepted. But you can expedite the process by staying on top of any requests for additional paperwork and by following up with your insurer with any questions or to check on the status of your claim.
Gap insurance is worth it if you paid a small down payment on your car, your loan term is 4-5 years, or your car will depreciate quickly. Gap insurance is never mandated by state law, and few lenders or lessors require it, so the decision to buy it depends on personal circumstances.… read full answer
Gap Insurance Is Worth It When:
You don’t have the savings to pay off your loan or lease if the car is totaled or stolen.
Your down payment is less than 20% of the car’s value.
Your loan will last four years or more.
You drive more miles than average, which reduces the car’s value faster.
Your car is a make and model that depreciates especially fast, like a luxury sedan or electric vehicle.
You are a single-car household and need a car to get around.
Your loan includes negative equity from your last car.
Since gap insurance covers the difference between the car’s actual cash value and the amount you owe, researching these two numbers will be a key deciding factor in whether gap insurance is worth it.
Why Getting Gap Insurance Is Worth It
For example, say you buy a car for $20,000 and your down payment is $2,000. This small down payment suggests that gap insurance might be worth it, but it’s still a good idea to check the car’s anticipated value after a year to determine if there will be a gap. If the car is worth $12,000 after a year but you’ll still owe $15,000, gap insurance could be a smart investment. If you don’t buy gap insurance and this car is totaled after a year, you’ll still owe $3,000 even though you can no longer drive it.
On the other hand, if your down payment is large enough or the car’s resale value is high enough that you’ll never owe more than the car is worth, gap insurance is unnecessary. Similarly, if you do owe more than the car is worth but you have the resources to pay the difference if the worst happens, it might be worth taking the risk.
Gap insurance takes 5-45 days to pay the policyholder after a claim is filed. For drivers to receive a gap insurance payout, the car first needs to be declared a total loss, and the insurance company needs to accept the claim.
State laws also dictate how long an insurance company has to pay for a claim. For example, insurers in Texas must pay within five days after accepting a claim. Some other states, like Massachusetts, do not have a specific limit, saying only that an insurer must pay within a “reasonable” amount of time.… read full answer
Factors That Affect How Long it Takes for Gap Insurance to Pay
Insurance companies will generally declare a car a total loss within 30 days of the initial claim being filed. However, more complicated situations take longer to settle, such as:
Accidents involving multiple drivers
Unclear fault determination
Once the car has been officially established as a total loss and the insurer agrees to pay for gap coverage, the company will begin to process the gap payment. Since gap insurance pays for the difference between a car’s actual cash value (ACV) and the balance on its loan or lease, gap insurance payments are usually sent straight to the lessor or lender.
How To Speed Up Gap Insurance Payout
To get the fastest possible gap insurance payout, be sure to check your policy details and follow any instructions from your insurance company. For example, some insurers require you to keep making payments to your lender or lessor while the claim is being investigated.
Also make sure to send the insurance company any necessary documents, like a copy of the police report, and promptly sign and return all paperwork. And if needed, check your state’s laws to see if there’s a specific window during which your gap insurer is required to pay.
After a car is totaled, gap insurance covers the balance between what is owed on a driver’s loan or lease contract and what is paid to the lender by their collision or comprehensive insurance policy, or another driver’s liability insurance. A claim must be filed and verified before a gap insurance provider will make a payment.… read full answer
The policyholder files a claim with their gap insurance provider as soon as the car is declared totaled by their primary insurance provider.
The gap insurance provider will verify the car has been totaled due to a covered cause.
The driver’s primary insurer pays for the actual cash value of the vehicle, minus any applicable deductible.
The gap insurance provider pays the difference between the primary insurance payout and what’s still owed on the loan/lease contract.
An insurance company will “total” a car when the damage to the vehicle is so severe that the cost to repair it exceeds a certain percentage of the car’s actual cash value (ACV), depending on the insurance company’s policies and state law.
If you think you might need gap insurance coverage, contact your primary insurance provider, and possibly your lender, to see if gap insurance makes sense for your personal situation. Some gap insurance providers only sell policies to original loan/lease holders within a short period of time after the contract is signed, but others will sell a driver gap insurance as long as there is a need, no matter the age/condition of the vehicle.
Finally, it’s important to note that gap insurance is different from loan/lease payoff plans, which customers can purchase at any time if they have an active contract on their car. While gap insurance will pay the entire difference between a financed vehicle’s ACV and the contract’s balance, and often any deductibles, loan/lease payoff plans only pay a maximum percentage of a car’s ACV and don’t generally cover deductibles.
WalletHub Answers is a free service that helps consumers access financial information. Information on WalletHub Answers is provided “as is” and should not be considered financial, legal or investment advice. WalletHub is not a financial advisor, law firm, “lawyer referral service,” or a substitute for a financial advisor, attorney, or law firm. You may want to hire a professional before making any decision. WalletHub does not endorse any particular contributors and cannot guarantee the quality or reliability of any information posted. The helpfulness of a financial advisor's answer is not indicative of future advisor performance.
WalletHub members have a wealth of knowledge to share, and we encourage everyone to do so while respecting our content guidelines. This question was posted by WalletHub.
Please keep in mind that editorial and user-generated content on this page is not reviewed or otherwise endorsed by any financial institution. In addition, it is not a financial institution’s responsibility to ensure all posts and questions are answered.
Ad Disclosure: Certain offers that appear on this site originate from paying advertisers, and this will be noted on an offer’s details page using the designation "Sponsored", where applicable. Advertising may impact how and where products appear on this site (including, for example, the order in which they appear). At WalletHub we try to present a wide array of offers, but our offers do not represent all financial services companies or products.