How to Cancel a Gap Insurance Policy and Get a Refund
Canceling a gap insurance policy is usually easy, especially if you purchased your policy through an insurance provider.
Gap insurance coverage is good to have if you drive a new vehicle, but it is not a type of coverage that you want to hold on to forever. Most people will be eligible for a refund on any unused portion of their coverage.
If you are wondering how to cancel your gap insurance policy and get a refund, the car insurance shopping app Jerry has put together all the information you need to make it happen. Why stop there, though?
Jerry can help you compare car insurance quotes online from top providers in seconds flat. Swapping is just as effortless. Jerry takes care of all the paperwork, phone calls and even cancels your old policy on your behalf.
- What is it?
- Should I cancel?
- Cancelling gap coverage and refunds
- Can I still get a refund after selling/trading my vehicle?
- Calculating GAP refund
- Cheap car insurance
What is gap insurance?
GAP, or Guaranteed Asset Protection insurance, is a popular add-on coverage option that covers the difference between the principal remaining on your loan and the actual cash value of your car is totaled.
The value of new cars depreciates most dramatically right after they are driven off of the lot. Because of depreciation, most new car owners will owe more than their car is worth—at least in the earlier stages of paying off the car loan.
For example, if you owe $20,000 on your loan, but your car is actually worth $15,000 when it is totaled, gap insurance will cover the remaining $5000 up to your policy limit.
For this reason, gap insurance might be ideal for anybody who leases, has less than half of their loan paid off, or has a high interest rate on their car loan.
Key takeaway GAP insurance covers the difference between the principal remaining on your loan and the actual cash value of your car is totaled.
Should I cancel my gap coverage?
Once you have less money to pay off on your loan than your car’s actual value gap insurance just won’t be worth it anymore.
The good news is that you will be able to get a prorated refund on your gap policy whenever you are ready to cancel.
Here’s how to get a better idea of when it is the right time to cancel your gap insurance.
Yes to canceling if —
If the amount of loan you have left to pay off comes to less than your car is currently worth, it’s time to cancel your gap insurance policy.
There will be no gap left to recover if your car is totaled. At this point, you will just be paying for extra insurance coverage you won’t use.
No to canceling if —
If you are upside down on your loan (you owe more than your car is worth) gap insurance can be a good thing to have. If you don’t want to owe a debt if your car is totaled, consider holding off on canceling until you are no longer upside down.
Broadly speaking, gap insurance is ideal for anybody who leases, has less than half of their loan paid off, put down a low down payment, or has a high interest rate on their loan.
Key takeaway You should cancel your GAP insurance if the amount on your loan is less than the car is worth.
How to cancel your gap insurance coverage and get a refund
Gap insurance can be purchased from either a car insurance provider or a car dealership, here’s how to cancel both.
How to cancel gap insurance from your insurance provider
If you are ready to cancel your gap insurance coverage, it is easy to do. Just call up your insurance provider and let them know that you would like to cancel your gap insurance policy.
Some insurance companies might allow you to modify your policy online with just a few clicks of a button. If you use an app or webpage to cancel your gap, just be sure to review your new policy details afterward carefully.
How to cancel gap insurance from a dealer
If you want to cancel your gap insurance from a dealer, you will have to call them up and ask them to cancel your coverage.
Things can get a bit complicated with dealership premiums, but in most cases, you should be able to get a refund for the coverage you didn’t use.
Gap insurance is never required by law. However, your dealership may insist that you take out a gap insurance policy before driving your financed car off the lot.
Even if you don’t want to cancel your gap insurance coverage altogether, you will probably find better gap insurance rates elsewhere—like Jerry.
If you’re shopping for gap insurance, Jerry will generate competitive quotes from top providers in less than a minute.
Choose from competitive quotes from up to 45 leading insurance companies, and Jerry takes care of the rest—securing your new policy and canceling your old one. No long forms. No calling around. No hard work. Just savings. The average Jerry user saves $879 a year on car insurance.
Can I request a GAP insurance refund after selling or trading in my vehicle?
In most cases, you should be able to get the lump-sum payment difference on your policy back.
You will have to read over your insurance contract to determine if you are actually eligible for a refund. In most cases, you will still qualify for a partial return after you sell or trade your car.
How to calculate a GAP insurance refund
If you paid your entire premium upfront, you can calculate your gap insurance refund to get a better idea of what to expect.
Start by checking the policy expiration date on your gap insurance policy. Now find out how much you paid for your gap insurance premium. Most top insurance providers will make this information easily accessible either online or through their mobile app, but you can just call for the details too.
When you get your total premium costs, divide it by the total number of months your policy covers. This is your monthly policy cost. Now divide this figure by the number of months remaining on your policy.
Let’s say you take out a $600 gap insurance policy for a 24 month coverage period. Let’s also say that according to the terms and conditions of your policy, you are eligible for a full refund. You will be paying about $25 a month. If you decide to cancel that policy with 11 months remaining, your total refund will be about $275.
Key takeaway Use your policy details to calculate your gap insurance refund.
Jerry can help you find the right insurance coverage
Why stop the savings at just canceling your gap insurance policy when Jerry can almost instantly generate quotes from all of the top insurance providers for you?
Jerry is a lot more than an insurance shopping app. It is an end-to-end pocket insurance broker that is always on top of your policy.
Not only does Jerry allow you to find the cheapest insurance policy fast, but the app takes care of your insurance needs from start to finish. You just pick your policy, and Jerry handles the rest—right from canceling your old coverage, taking out a new policy, and even taking care of all of your refunds in the future.
It should come as no surprise that Jerry is the top-rated insurance app available in the app store today. Our glowing reviews speak for themselves.
“Fast, easy, with no hassle! I had been spending way too much on my car insurance. Jerry found me huge savings and then literally did everything for me to handle the switchover. I barely had to lift a finger. All I had to do was pick my policy. I will definitely recommend Jerry to all my friends and family!” — Satisfied Jerry User.
Frequently asked questions
Will I get a full gap insurance refund?
Most providers will give you your money back if you cancel 30 days of taking out the policy.
Depending on the insurance provider, you may still have to pay a cancelation fee. If your insurance company does charge a cancelation fee, it is probably about 10% of your remaining premium.
Can I get a refund after a total loss?
No. If your vehicle is rendered a total loss after an accident, you will be getting an insurance payout. You can’t get a refund if your provider has already paid out on your current premium period.
This holds true even if you are no longer eligible for a gap insurance payout, so it is important to be proactive in canceling your gap insurance coverage.
Should I keep my GAP insurance?
When it all comes down to it, the choice is up to you. It is unlikely you will need to use your gap insurance coverage—but anything can happen. Nobody wants to end up in a situation where they own thousands on a loan for a totaled car, either.
If you are looking for an easy way to compare your insurance options and find out more about whether gap insurance is worthwhile using Jerry to compare quotes for you will make your life that much easier.
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