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.
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
- Medical bills
- 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.
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