Why would late payments affect the amount I'm receiving from my gap insurance?

I purchased my vehicle for $19,000. I still owed $16,000 on my loan when the car was totaled. My insurance paid out $11,000. I have gap insurance, but they said they will only pay out $3,500 due to late payments on my loan. How can I get them to pay the full amount?

Answer
“When you sign a finance agreement for a vehicle, you are also agreeing to the terms and conditions of the loan. Unfortunately, since you made late payments and incurred fees and interest from those payments, your gap insurance isn’t required to pay those fees.
You can reach out to your lender to get an exact understanding of how your late payments affect your final balance. If the total does equal the remaining $1,500 left on your loan after your gap insurance payment, you’ll be required to pay that out of pocket.
If there is a discrepancy and you can provide proof, you may be able to negotiate with the gap insurance company.
While this is a stressful situation, the best thing you can do is reach out to your lender and get clarification. In the future, you’ll at least know how late payments can affect your gap insurance claim. “
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Emily Maracle
Answered on May 03, 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.
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