How Does a Gap Insurance Refund Work?
If you have recently bought a new car or are in the process of buying a new car, you could have come across the option of choosing gap insurance coverage. Gap insurance protects your investment when you buy a new vehicle near Littleton, Castle Rock, or Parker, Colorado.
If you have picked up gap coverage or are considering it, you may have some questions, like how does a gap insurance refund work? In this guide, our team here at McDonald Volkswagen will provide you with clarity around this question.
What Is Gap Insurance?
First, we feel it’s important to cover what gap insurance is and what it does for you as a driver. So, that is where we’ll start.
When you purchase a new vehicle, you have to also purchase insurance for it. Liability insurance is required in case you’re involved in an accident, protecting you and other drivers.
When you drive off the lot in a new vehicle, though, your car is likely to experience immediate depreciation. If you took out a loan on the vehicle, this could actually mean that the loan amount is more than the vehicle is worth. This is where gap insurance comes in.
In the event that you total your vehicle, typical insurance coverage would pay what the vehicle is worth. So, you could receive a lump sum that is less than what you actually owe on the vehicle. You would then have to pay off the loan for a vehicle that is no longer operable.
Gap insurance protects you here. It’s designed to cover the difference between what traditional insurance will pay you and what you owe on the vehicle.
How To Get a Gap Insurance Refund
Once you have paid off your car, there really is no need to carry gap insurance. At this time, you can look to get a refund. Since the insurance has provided you with coverage and peace of mind for some time, you won’t receive your entire investment back. However, you may be able to have some of the amount refunded.
You can receive a refund in one of two ways:
- You can pay the gap insurance coverage off in advance. Then, you are entitled to receive the unused amount as a refund.
- If you pay your car off early and no longer need to carry coverage, you may be entitled to a small refund.
Receiving Your Refund
In order to receive your refund, you will, of course, need to contact your gap insurance provider. They’ll likely require paperwork, such as cancellation forms, an odometer disclosure statement, and evidence that your vehicle has been paid off. From there, they’ll work with you to get you the amount owed to you.
Learn More About Gap Insurance Today
Do you still have questions about gap coverage, after checking out this guide? Well, our team is well versed on the subject. We are ready to answer how gap insurance refunds work and many other queries. Just contact us here at McDonald Volkswagen to get the assistance you need.
We’re proud to serve Littleton, Castle Rock, and Parker, CO, drivers and hope to assist you soon!
