“Your gap insurance
will normally cover the difference if you owe more on your loan than what your vehicle is worth.
Since the difference was $2,000, your gap insurance would normally pay the full amount. However, since you received a refund of $1,000 for an extended warranty, that amount went directly to your lender.
Normally, extended warranties and other loan services are rolled into your monthly payments. Since you received a refund for the unused balance, it was applied directly to your loan.
This reduced your loan balance by $1,000, which made your remaining balance $1,000. This is why your gap insurance only paid $1,000, as this zeroed out your loan.