Does gap insurance pay for your car loan in Delaware?

My car was deemed a total loss and the insurance company valued it at $10,000. I still owe $1,500 on my loan. The car insurance company said they would pay off my loan and then mail me a check for $8,500. Is this how gap insurance works, or is my insurance company wrong?

Answer provided by
Emily Maracle
Answered on Apr 20, 2021
Emily Maracle is a car insurance specialist living in New York. Originally from the Pacific Northwest, she has a degree in English Literature and a background in customer service. She enjoys cooking, gardening, and living sustainably. In the future, she can't wait to upgrade to a hybrid or electric car.
Gap insurance only provides coverage if you owe more on your loan than the vehicle is worth. Since your vehicle is worth more than your loan, your gap insurance doesn’t apply.
Your insurance company is doing the right thing by paying off your loan balance. They want to make sure your loan is paid off, allowing you to buy a new car without making two car payments or defaulting on your prior loan. “

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