Gap Insurance Refund

In addition to the required liability insurance you must take out on your vehicle, you may also be thinking about securing gap insurance as well. If this is the case and you pay your car loan off early, you may be able to enjoy a little extra money back in your pocket. A gap insurance refund may be an option for you. While you will not be able to get a refund for your required liability coverage because you will continue to need this coverage even after the loan is paid off, a gap insurance refund may still be available to you. How does a gap insurance refund work? The finance department at Basil Ford of Niagara Falls has created this helpful guide. 

The Basics of Gap Insurance 

When you purchase a brand new car near North Tonawanda or Grand Island, it will begin to depreciate as soon as it leaves the showroom. If you chose a traditional auto loan, there may come a time where you owe more on the vehicle than what it is currently worth. If you are involved in an accident where the vehicle is totaled during this timespan, your insurance will only cover what the car is worth. You'll then be on the hook to cover the remaining amount of the loan on a vehicle you no longer own. The purpose of gap insurance is to take care of that amount so you do not have to pay out of pocket. 

How Does a Gap Insurance Refund Work?

With a gap insurance refund, you will not be able to get the full amount you paid for the coverage back, but you could still have a portion returned to you if you paid off the vehicle early. How does a gap insurance refund work? It depends on how you paid off your policy:

• Lump Sum Payment: If you paid off the gap insurance policy in advance, you are entitled to a refund on the unused portion. 
• Monthly Payments: If you pay your premiums monthly, you are not entitled to a refund on past months of coverage. If you end up canceling your coverage early in the month after making your gap insurance payment, you could be entitled to a small refund. 

How Do I Cancel My Gap Insurance? 

If you would like to cancel your gap coverage in Lockport, you will need to have the right paperwork. Contact your gap insurance provider to begin the cancellation process and have the following information on hand when needed: 

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

Once everything has been submitted, you should be given a refund on any portion of the policy that has not been used. 

Contact Basil Ford of Niagara Falls for More Information 

Now that you know more about your gap insurance refund options, you may have additional questions about automotive financing or insurance. We can help! Contact the team at Basil Ford of Niagara Falls today. We would be more than happy to assist you.