Gap insurance covers the cost of your car if you try to jump it over a canyon or ravine but come up short. Kidding! What it really means is Guaranteed Asset Protection.
If your car is ever stolen or totaled, gap insurance covers the difference between what your car is currently worth and the amount you owe on it. Most folks add gap insurance to their policy because the moment you drive a new car off the lot, its value starts to tank—within a year, most cars are worth less than 20 percent of what you paid for it.
You can also get a refund on your gap insurance—either pay by month or as a lump sum. If you choose to fork out all the moolah upfront, a refund could be in your future only if you pay off your loan early, sell your car, switch insurance companies, or cancel the policy. For monthly payments, refunds depend on how early in the month you cancel the policy.
To request a refund, contact your insurance company and spill the beans about your situation. They'll most likely want documentation for bill of sale or loan payoff.
Not all insurance providers offer refunds for gap insurance. Also, some may have a term requirement before you're eligible. Plus, a cancellation or administrative fee could take a little off the top of your refund amount.
If you paid off your car early and are thinking of selling it with Peddle, give your provider a shout to see if you're eligible for a gap insurance refund.
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