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?

Apr 20, 2021
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Emily Maracle
Answered at Apr 20, 2021
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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