Automotive

Refused Refund of Gap insurance

  • Last Updated:
  • Jul 17th, 2020 11:45 am
[OP]
Jr. Member
Nov 20, 2019
116 posts
186 upvotes

Refused Refund of Gap insurance

I bought gap insurance with my new car in 2016 and had loan for 84 months. I paid off my loan in 44 months.
But Gap insurance company refused to refund money for unused period. Any suggestions?
21 replies
Deal Expert
User avatar
May 10, 2005
36414 posts
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Ottawa
I do not think you are owed anything. The gap insurance is for replacement if you crash the car while you were paying for itand you did not. It is over and you did not crash.
You can now get replacement insurance from your regular company if you want.
Newbie
Nov 23, 2014
92 posts
103 upvotes
Regina, SK
My suggestion is to read the fine print beforehand. I wouldn’t expect a refund unless it was explicitly stated in the insurance contract.
Deal Expert
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Jan 27, 2006
19286 posts
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Woodbridge
I never heard of Gap until it was mentioned by a co-worker. I've financed several purchases and it was never offered. But when I helped a few friends bought theirs both times they insisted buying it. They refused.

Is this new.
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Deal Addict
Jan 8, 2007
3147 posts
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AB
bembol wrote: I never heard of Gap until it was mentioned by a co-worker. I've financed several purchases and it was never offered. But when I helped a few friends bought theirs both times they insisted buying it. They refused.

Is this new.
GAP and Replacement insurance are often confused.

I would never buy a new car without gap and full replacement insurance.
Deal Addict
Mar 30, 2010
2990 posts
1328 upvotes
GTA
Simran2427 wrote: I bought gap insurance with my new car in 2016 and had loan for 84 months. I paid off my loan in 44 months.
But Gap insurance company refused to refund money for unused period. Any suggestions?
Are you implying that you pre-paid gap insurance (or all insurnace) for the entire 84 month loan period?
Deal Fanatic
Jul 26, 2007
6726 posts
4296 upvotes
Toronto
Where did you buy gap insurance? At the dealer? Or was it an add-on from your insurance?
[OP]
Jr. Member
Nov 20, 2019
116 posts
186 upvotes
Viperoni wrote: Are you implying that you pre-paid gap insurance (or all insurnace) for the entire 84 month loan period?
Yea I prepaid full GAP insurance for entire loan period of 84 months and was bought from dealer
Deal Expert
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May 10, 2005
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Ottawa
aleks wrote: GAP and Replacement insurance are often confused.

I would never buy a new car without gap and full replacement insurance.
Why?
Why both?
Deal Guru
User avatar
Mar 23, 2008
13006 posts
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Edmonton
Simran2427 wrote: Yea I prepaid full GAP insurance for entire loan period of 84 months and was bought from dealer
You should read the fine print of what you purchased. I'm going to guess that you're screwed.

C
Jr. Member
Jul 3, 2017
175 posts
181 upvotes
Southern Ontario
The cost of that policy you bought is sunk. After 30 days you typically cant refund a GAP policy from a dealership. You had the benefit for 44 months and you either chose to pay it off and keep the car or sold it. If you brought any negative equity in the deal I would suggest that paying it off early and keeping it was potentially foolish as you are now only going to get whatever its worth in the event of a write off and not whats remaining on the loan.

Lesson learned!
Deal Fanatic
Jul 26, 2007
6726 posts
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Toronto
I think you should get refund for remaining unused months. Insurance is always partially refundable with some penalty. I don't understand what make this company special.
Deal Expert
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May 10, 2005
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Ottawa
peteryorkuca wrote: I think you should get refund for remaining unused months. Insurance is always partially refundable with some penalty. I don't understand what make this company special.
Perhaps you do not know what he bought and what terms the policy has?
Deal Addict
Jan 8, 2007
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AB
Pete_Coach wrote: Why?
Why both?
Gap insurance: If you write the car off and you owe more than the market value of the car, GAP protects you and contract just ends and you owe the finance/lease company nothing.
Replacement insurance: If you write the car off within 5 years (TD Meloche) you get the full MSRP of the car back from insurance. So basically if you lease a car and 3 years into it your write it off, you get all your monthly payments back that you made for the 3 years minus interest.

Not sure how many people actually know about this. There have been 2 people recently on here that have got full refunds on their cars due to them being written off.
Deal Expert
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May 10, 2005
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aleks wrote: Gap insurance: If you write the car off and you owe more than the market value of the car, GAP protects you and contract just ends and you owe the finance/lease company nothing.
Replacement insurance: If you write the car off within 5 years (TD Meloche) you get the full MSRP of the car back from insurance. So basically if you lease a car and 3 years into it your write it off, you get all your monthly payments back that you made for the 3 years minus interest.

Not sure how many people actually know about this. There have been 2 people recently on here that have got full refunds on their cars due to them being written off.
So basically, you should just get replacement insurance as it will pay full MSRP for the car. No need for both.
Deal Addict
Oct 5, 2009
1170 posts
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Dartmouth
The owner should get what the contact he signed says he’s he entitled to. If it says you get a full refund if the car is written off you get a full refund. If it says you get a prorated portion (so if it’s 5 years and written off after 3 you get 2/5 back) . If it says no refund at all after 30 days then you get nothing.

Point being is that what people think is fair or what they think they know (all insurance entities you to a refund which is not true) is irrelevant.

When you buy this stuff you need to read the fine print before you sign and buy it. If you question what you should get you need to read the contract that spells out what you get. It’s that simple.
Deal Addict
Jan 8, 2007
3147 posts
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AB
Pete_Coach wrote: So basically, you should just get replacement insurance as it will pay full MSRP for the car. No need for both.
I see what you mean. I've always had GAP insurance included for free from the manufacturer, so I suppose you're right.
Deal Expert
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May 10, 2005
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Ottawa
Toolatecrew wrote: The owner should get what the contact he signed says he’s he entitled to. If it says you get a full refund if the car is written off you get a full refund. If it says you get a prorated portion (so if it’s 5 years and written off after 3 you get 2/5 back) . If it says no refund at all after 30 days then you get nothing.

Point being is that what people think is fair or what they think they know (all insurance entities you to a refund which is not true) is irrelevant.

When you buy this stuff you need to read the fine print before you sign and buy it. If you question what you should get you need to read the contract that spells out what you get. It’s that simple.
Lots of "ifs".
Buyer beware is the key.
Deal Guru
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Jul 12, 2003
12353 posts
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Toronto
If "Gap" insurance is just like a life insurance in case you died and the car loan is paid off, then you are better off buy a term life insurance from life insurance companies.
You can cancel it anytime and the pay out can be used on anything.
It basically pay to your beneficiary and they can use the money tto pay off whatever they have to at that time, + the coverage remains the same for the during of the term.

For example, if the car loan is 50k, it is always 50k coverage, even the car worth only 30k


Replacement insurance is different, it is in the event the car is stolen or totaled, they pay you back the full value of the brand new car. It protect the depreciation once the car hit the ground and drove out from dealership.
Retired Forum Moderator February 2009 - June 2015
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Mar 13, 2009
713 posts
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Maple
Pete_Coach wrote: So basically, you should just get replacement insurance as it will pay full MSRP for the car. No need for both.
Not exactly.

For example, if your car was total loss after 2 months, you can still owe more than the full price of a new car because of the interest.

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