How to File a GAP Insurance Claim: A Step-by-Step Guide

If your car is totaled in an accident and you owe more on your loan than the car is worth, GAP insurance can be a lifesaver. GAP coverage pays the difference between your primary auto insurance settlement and your outstanding loan balance.

But how exactly do you go about filing a GAP insurance claim to get this essential payout? This comprehensive guide explains the typical claims process and what to expect step-by-step

What is GAP Insurance?

First, let’s review what GAP insurance is and how it works. GAP stands for “guaranteed auto protection” and is an optional add-on coverage.

Here’s a simple example of how GAP protection can save you money

• You owe $15,000 still left on your auto loan
• Your car is totaled in a crash and determined to be worth $10,000
• Your primary insurance pays you $10,000 for the actual cash value (ACV)
• But you still owe the lender $5,000
• GAP insurance pays that $5,000 difference

Without GAP coverage, you’d be stuck paying off a loan balance for a vehicle you no longer have. This insurance protects against major financial loss.

When Can You File a GAP Claim?

Most GAP policies allow you to file a claim only when two things have happened:

1. Your car is declared a total loss by your primary auto insurance company. This happens when the repair cost exceeds a high percentage of the ACV, usually 70-80%.

2. Your primary insurance claim is fully settled. You’ve been paid the ACV for your totaled car.

Once these two criteria are met, there is now a “gap” between what your regular auto insurance paid out and what you still owe on your loan. This gap is exactly what GAP coverage was designed to fill.

Who Files the GAP Claim – You or the Lender?

In most cases, your auto loan lender or lease company will file the GAP insurance claim on your behalf. Here are some key reasons why:

• The lender is listed as the payee or co-payee on the GAP policy.

• The financier has a vested interest in recouping the remaining loan balance you owe.

• The lender already has the required documents like loan agreements in their possession.

So after you receive your primary insurance settlement, the lender simply files a claim with the GAP insurer to cover their loss. Typically you don’t have to do anything as the policyholder.

However, there are some situations where you may need to file a GAP claim yourself, such as:

• You paid for GAP insurance separately from your auto loan or lease agreement, like through your own insurer.

• Your car loan is through a private individual rather than a financing company.

• Your lender goes out of business or for some reason does not file a claim.

• You need to claim reimbursements beyond just the remaining loan balance, like deductibles or fees.

Check your specific GAP policy documents to confirm the proper claims handling procedures. But in most cases, expect your lender to take care of submitting the GAP claim.

What Information Do You Need to File a Claim?

No matter who files the GAP insurance claim, there is certain documentation required as proof, including:

• Police accident report (if applicable)

• Primary insurance settlement letter showing details

• Vehicle valuation report showing the total loss determination

• Copy of loan or lease agreement

• Loan payoff amount from lender

• Proof of GAP coverage and deductible amount

• Copy of vehicle title or registration

Since the lender already has most of these documents, claims filing is simpler when they handle it. But if you must submit the claim yourself, request copies of these items from your insurance company, lender, and any other relevant parties.

Step-by-Step Guide to Filing a GAP Claim

If your situation requires you to file the GAP claim personally, follow this process:

Step 1. Notify your GAP insurer of the total loss situation immediately. Call or visit their website to start a claim. Provide basic details about what happened.

Step 2. Gather all required claim documents. See list above. Make copies and also request originals from various sources.

Step 3. Submit the GAP claim and documentation to the insurer. Send photocopies first so the claims process can begin, then provide originals if requested.

Step 4. Cooperate fully with the GAP insurer’s investigation. Respond promptly to any additional requests for documents, details, etc.

Step 5. Review the claim settlement offer carefully. Make sure you understand how the amount was calculated. Ask the insurer to correct any discrepancies before accepting.

Step 6. Receive the claim payout once accepted. The insurer will send funds to your lender to cover the remaining loan balance.

Step 7. Pay your deductible if applicable. Some GAP plans have a deductible up to $1,000 that you must pay out-of-pocket before the claim is finalized.

Step 8. Get written confirmation from lender that your auto loan balance is paid in full. Keep this documentation for tax purposes if needed.

Tips for Smooth GAP Claims Handling

To help ensure your GAP claim gets paid quickly and accurately, keep these tips in mind:

• Review your policy so you understand the entire claims process upfront.

• Notify your GAP insurer immediately after your primary claim settles.

• Organize paperwork neatly and make copies before sending originals.

• Follow up frequently with the insurer to check claim status.

• Meet all document or information deadlines given by the insurer.

• If you dispute the claim settlement amount, contact your state insurance regulator for help.

• Consider hiring a public adjuster or attorney if the insurer denies your claim outright.

What Does GAP Insurance Cover Beyond the Loan Balance?

The primary purpose of GAP coverage is filling the gap between your car’s ACV and remaining loan amount. But many policies also reimburse you for other costs, such as:

• Your primary insurance deductible for the total loss

• Sales tax on a replacement vehicle

• Early lease termination fees

• Remaining loan interest or finance charges

• Title transfer fees and taxes

Check your specific plan, as extra coverages can vary. You may need to add endorsements to get protection beyond just the gap amount.

Key Takeaways

• GAP insurance pays the difference when your loan balance exceeds the car’s value after a total loss.

• In most cases, the auto lender files the GAP claim for you after your primary insurance settles.

• You may need to file the claim yourself in certain situations – follow the step-by-step guide.

• Make sure you have all required documents and communicate with the insurer frequently.

• Understand how the claim payment is calculated before accepting the settlement.

• GAP may reimburse more than just the remaining loan balance depending on your coverage.

Knowing what to expect for the GAP claims process can give you confidence in getting your complete payout in the event of a totaled vehicle. Check with your agent or insurer if you have any questions filing a claim.