What does a negative gap mean with gap insurance?

I was involved in a not-at-fault accident and my car was marked a total loss. I have gap insurance and tried to submit a claim. However, my lender told me I had a negative gap and wasn't able to claim anything, especially since my vehicle had prior damage. What should I do?

Apr 21, 2021
Answer provided by
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Emily Maracle
Answered at Apr 21, 2021
“The purpose of gap insurance is to cover the difference if you owe more on your loan than the actual cash value of your vehicle. In normal situations, your gap insurance would apply and cover this difference.
However, car insurance companies and lenders often have different terms, conditions, and definitions regarding their coverages and products.
A negative gap would imply that you have already received more money than would be needed to cover the gap on your loan. It could be that the dealership or lender will be providing you with a refund that would cover the balance.
Insurance regulations require that you never financially benefit from a transaction, so the denial of a claim is to ensure you aren’t being paid more than you are owed.
If the terms and conditions of your gap insurance aren’t clear, reach out to your lender for clarification. “
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