Gap insurance?!?

Question

my sister bough a new kia. ows 15,000 left and after 9 months was totalled. the insurance co. is paying 10. shouldn't gap cover the other 5? they say they will only cover 2000. and she would be stuck with the other 3. is that how its supposed to work? i dont know anything about gap insurance. it just sounds wrong to me

Answer 1

If she rolled negative equity from a prior loan into the new loan, the gap doesn't cover any of the negative equity.

Answer 2

GAP does not give replacement cost coverage. It will only help with the amount owed.

So it sounds like your sister put $3,000 down on the car or got it in trade in value. That leaves a debt of $12,000 which the GAP+ Actual Cash Value will cover.

FYI, some insurance companies are starting to offer replacement cost coverage on new cars. If your sister had this, she would be getting the full $15,000.

Sorry this happened to her, make sure she speaks with a knowledgeable insurance agent when she gets a new car.

Answer 3

Pull out the gap insurance paperwork and see what it says.  It may have a cap of $2,000.  $15,000 seems like a lot for a Kia.  Did she roll a balance on her prior car loan into the loan for the Kia? If so the gap insurance probably won't cover the portion of the loan that was from the old car.  If gap insurance did do that, then everyone who rolled old car balances into their new loans could just buy the gap insurance, torch the new car, get the whole thing paid off and start fresh without any old loan balances following them around.  No gap insurance company would want that!

Answer 4

Hmmm, when I purchased gap insurance from my credit union it covered the entire "extra" that my auto loan was. That was the whole point of having the gap insurance in the first place. My car was totalled when somebody rear-eneded me. My regular insurance paid off $7000 for what my car was worth, and gap covered an additional $5000. Perhaps this is something new they are doing, and only paying a certain amount. You need to read the fine print in your policy, and this gap insurance. That's the best way to start. If her car was totalled by somebody else, you can always threaten to take them to court in oreder to get them to pay off the remaider of the loan.

Answer 5

I thought they cover whatever the insurance wouldn't cover also.

We traded our 2006 in and are getting 1700 back for the warranty - and some money back on the gap.

So I wonder if the gap will only pay for the car and not all of the extras like the warranty and whatever other charges the car dealership adds on?

Just a thought

Answer 6

It depends on how much she put down on the car. We just went through this over the winter. Our insurance won't cover the 1800 we put down on the truck we bought, but they covered everything else. Good luck!