How to Get a Gap Insurance Refund From the Dealership

To cancel gap insurance from the dealership and get a refund, contact the dealership or their associated gap insurance company before the refund deadline.
Written by Melanie Krieps Mergen
Edited by Pat Roache
If you purchased
gap insurance
(guaranteed asset protection) from the dealership when you bought your car and you no longer need this protection, you may be able to cancel it and get a refund for the unused portion of coverage. Contact the dealership to follow the correct steps and make sure you request a refund before the deadline.
  • It might make sense to cancel gap insurance if you’re selling your car, switching gap insurance providers, or no longer need the coverage. 
  • If you paid for this gap insurance coverage in full at closing, contact the original car dealership to learn about the cancellation process.
  • As long as you submit a request before the deadline, you should be eligible to receive a prorated refund for canceling before the end of your policy term.

When to cancel gap insurance from the dealership

Although gap insurance is often a wise add-on when you buy or lease a new car, it may be time to cancel your policy if:
  • You’ve sold your vehicle
  • Your car loan balance is less than the car’s
    actual cash value
    of your car
  • You no longer feel gap insurance is necessary for your vehicle
  • You want to switch gap insurance providers

If you cancel gap insurance from the dealership, do you get a refund?

You may be eligible for a refund if you already paid for your gap insurance in full and are canceling before the end of your coverage period. You should be able to get a prorated refund for the months of coverage you no longer need.
You will have to read over your insurance contract to determine if you are eligible for a refund.
You cannot get a gap insurance refund if:
  • Your vehicle has been declared a total loss
  • Your gap insurance policy has expired
  • You have not fully paid your gap insurance premium
  • You missed the deadline to request a refund

How to cancel gap insurance from the dealership and get a refund

  • Review your original contract: Check your gap insurance contract for any cancellation restrictions or deadlines for requesting a refund.
  • Request other gap insurance quotes (if necessary): If you have a
    car loan
    or lease agreement, your lender may require you to carry gap insurance. To avoid a lapse in coverage, you’ll need to purchase gap insurance from your regular auto insurance company or a different provider before you cancel your current policy.
  • Prepare your paperwork: Make sure you have your original gap insurance paperwork, your new gap insurance paperwork (if applicable), and your auto loan or lease agreement.
  • Contact the dealership: Request a cancellation and prepare to follow the necessary steps.
  • Request a refund: If you paid your premium in full when closing on your new vehicle, you may be eligible for a refund for the coverage you didn’t use once you cancel. If your gap insurance is bundled into your car payment, you should notice a decrease in your monthly payments, as well.

How to calculate a gap insurance refund

If you paid your entire premium upfront, here’s how to calculate your estimated gap insurance refund:
  • Divide your gap insurance premium by the total number of months your policy covers
  • Check your policy expiration date to find out how many months you have left
  • Multiply your monthly cost by the number of months remaining on your policy
Example: Let’s say you take out a $720 gap insurance policy for a 36-month coverage period, and you are eligible for a full refund according to the terms and conditions of your policy. If you are currently paying about $20 per month and you decide to cancel that policy with 11 months remaining, you could receive a total refund of up to $220.
Keep in mind: This might not be the exact refund you will receive—some policies may charge you a cancelation fee that would reduce this amount. Additionally, if your car dealer rolled your gap insurance payment into your loan amount, the refund may not be so straightforward.
On the other hand: If you cancel your policy shortly after purchasing it, you may be eligible for a full refund.
You’ll need to contact your dealership (or the gap insurance provider they work with) to know for sure.
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No. If your vehicle is declared a total loss after an accident and you were insured, you will get an insurance payout. You can’t get a refund if your provider has already paid out on your current premium period.
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