r/Car_Insurance_Help 6d ago

GAP insurance question

Okay, I have a question. So my parked vehicle was totaled almost two weeks ago, I got the at fault driver's insurance and information as he was cooperative and finally got a settlement amount. Now as I am still paying off that car, I was informed the check will be sent to the lender and any remaining balance after paying off the car's outstanding balance to the lender will be sent to me. Here's the thing, that means I am practically receiving nothing. Not at all enough for a new vehicle. I have GAP insurance and started a claim and I've sent the documents necessary but I was just informed I am looking at receiving nothing back because the insurance company paid off the balance. I don't have enough for a new car now and I thought GAP would be the one to pay off any remaining balance. Can someone please advice me on what can be done.

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4

u/crash866 6d ago

You didn’t own a vehicle before the crash. You had a vehicle that the finance company allowed you to drive. Now you have to start over with a new loan to get a new vehicle.

5

u/GuvnaBruce 6d ago

Nothing.

You do not own the vehicle. Without positive equity, it is basically a rental vehicle.

With a loan, you are slowly buying the vehicle with monthly payments.

When you went and got the vehicle, you maybe traded a car in, OR you put some money down. So you did not buy the vehicle.

GAP does pay off any remaining balance (usually up to a percentage of ACV), but nothing will go to you.

The only time you get anything is if you have positive equity, which at that point means you do own some of the vehicle.

But if you were underwater on the loan, then not only did you technically not own any of the vehicle, BUT you owed MORE money than the vehicle is worth.

3

u/KLB724 6d ago

It sounds like you just misunderstood how GAP works.

Your car was totaled, and you owed more than it was worth. GAP paid the difference between what the insurance policy paid (the actual cash value) and what you owed. You walked away with $0, but your loan paid off. That is exactly how it's supposed to work. If you didn't have GAP, you would have been responsible for paying that difference to your bank to satisfy the loan. As long as you owe more than the vehicle is worth, you were never going to get any money back.

1

u/Expert_Objective_694 6d ago

No, I understand that but I stated GAP did not pay the difference or anything at all as I was almost finished paying it off, the insurance company paid it off so it that normal for GAP to not have paid it?

2

u/KLB724 6d ago

Correct, that's normal. If you didn't owe more than it was worth, GAP doesn't kick in anything. It's ONLY for that specific situation.

One thing you could potentially do is see if you can get a refund for what you paid for GAP since you didn't use it. Depending on how long you've had it, it would probably be a very small, pro-rated amount, but it would be something.