Gap Insurance Refund

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When you buy a new car to traverse the Peoria roads, you will of course need to get insurance. With all of the different kinds of coverage, it can be easy to overlook a specific kind of insurance called gap insurance. Gap insurance covers the “gap” in any of your car’s finances and a gap insurance refund can even get you a little bit of money back depending on some variables. The finance department at Mike Murphy Ford will break down the basics of Gap insurance and explain just how a gap insurance refund works.

What is Gap Insurance?

Gap insurance stands for Guaranteed Asset Protection and also covers the “gap” in any of your auto finances. Gap insurance covers the difference between the car’s worth and the amount you still owe on the car.

Let’s use an example to help break down gap insurance. Let’s say a East Peoria driver got into an accident with their car. Their car was worth $10,000, but the driver still owes the financing company $15,000. The driver’s insurance company pays out the $10,000 to cover the cash value of the car but doesn’t cover the remaining $5,000 the driver owes the financing company. Even though the driver is without a car, they still owe money to the financing company. Gap insurance comes to the rescue by paying the difference of the $5,000. Mike Murphy Ford can help you answer any uncertainties about your car and it’s worth with our payment calculator.

How Does a Gap Insurance Refund Work?

Many dealers offer standard gap insurance to cover Pekin drivers in the case of an accident. When you pay off your car, you may be entitled to some gap insurance money in a gap insurance refund. Here is how a gap insurance refund will work depending on how you pay off your auto loan:

  • Lump Sum Payment: When you pay off the gap refund insurance policy in advance, then you are entitled to a refund of the unused portions of that policy only.
  • Monthly Payments: With monthly payments, you won’t be able to get a refund on any past months since those premiums have already been used. However, if you cancel your payment plan early in the month, you may be entitled to a refund on the unused month or months.

Canceling Gap Insurance

If you decide to cancel your gap insurance, then the process is actually quite simple. You just need to be sure that you all the necessary paperwork ready at hand to show your gap insurance provider. Here is the paperwork you will need:

  • Gap insurance cancelation forms
  • Copy of an odometer disclosure statement
  • Copy of auto loan payoff showing the date your vehicle was paid off

Once you submit this paperwork, you should be entitled to a refund. The amount of the refund will depend on how much of the policy that was left and unused.

Answer Your Gap Insurance Questions at Mike Murphy Ford

Now that you know how a gap insurance refund works, our finance team can help you see if you are eligible for any refunds. We’re located in Morton, but you can visit Mike Murphy Ford online or contact us to talk to the finance team or apply for financing.

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