Another question about stolen auto-how does gap coverage work?

Question

i purchased gap coverage for my automobile but have never filed a claim for a stolen vehicle and just wondering how this works? do you think this is good coverage. i got it at my credit union for $250 which was considerably less than what the dealer asked. also wondering if vehicle hasn't been recovered in a couple of days how likely is it that it will be recovered? how long will it take for insurance to say it is unrecoverable and process claim?

Answer 1

I don't know everything about GAP coverage, but I used to work at a dealership and its pretty much pointless. Unless you live or go place where you assume you car would be stolen and you owe more than the insurance would pay you, so it makes up the difference.

i.e. - you spend 10k on a car the next day its stolen and insurance gives your 7500 for your payoff, GAP covers the 2500 difference you owe on your loan.

The claim I believe is when the police are done w/their investigation. I don't know as much about that.

Hope it helps.

Answer 2

You should have just got GAP coverage (also called loan/lease coverage) on your auto insurance policy.  It would have been a heckuva lot cheaper then that.

Answer 3

Answer from a General Insurance Agent

Gap coverage is supposed to pay the difference in an auto accident in the event your own Insurance fails to pay the amount of your remaining finance note.

It will only pay to a finance company or lien holder. Your finance company is actually the designated payee on the policy, not the vehicle owner. Once your vehicle finance note is paid off, the gap coverage is void.

A dealership usually earns 40 to 60 percent commission on whatever amount you paid for the Gap coverage. You actually got a great deal by buying through your Credit Union and likely have a reputable company.

Unfortunately most people are unsuccessful in claiming against GAP coverage.

GAP coverage is really just a rip off in the opinion of most insurance agents when purchased through a dealership. It is generally sold to the public at auto dealerships by finance officers who have no insurance license of any type.

It's better to have a good comprehensive Auto Insurance Policy.

Most states will allow an Insurer  to wait for recovery up to 60 days before declaring the vehicle unrecoverable. That being said. Most Insurance companies will not make you wait more than about 30 days.

Good Luck

Answer 4

It is great that you have GAP insurance and here is why. If you stolen vehicle is not recovered within 30 days it will basically be deemed a total loss and your carrier will settle with your the Actual Cash Value or ACV of your vehicle. Lets say your car is not recovered or is recovered but is a total loss. And lets say the value of your vehicle is $2500 but you owe your lienholder/bank $3000 for the car. Your carrier only owes the ACV so you will still own your leinholder $500. You can file under your GAP insurance and it will cover the $500. A good way to think of it is that it covers the GAP between the ACV and your loan. If you do not carry GAP insurance and you owe more than the value of your vehicle and your car is a total loss then you will be upside down and still owe the balance of your loan to your leinholder. If you have to use your GAP insurance you will break even - you won't have any money in your pocket but you won't owe your lienholder either.