Gap insurance is also available from many, but not all, auto insurance companies - check with your insurance
agent or contact your insurance company directly.
Some insurance companies do not offer gap coverage but might instead offer Loan/Lease Payoff coverage or
New Car Replacement coverage to customers for an additional fee.
How do I pay for the GAP coverage?
Normally, GAP is financed in with your loan. You may be able to pay the full GAP fee up front in one payment
Does GAP replace my comprehensive and collision coverage?
No, GAP is not a substitute for collision or property damage insurance.
Can I buy GAP on a salvage/reconstructed titled vehicle?
No. Salvage or reconstructed title vehicles are not eligible for GAP.
I am refinancing my loan. Can I purchase GAP at that time?
Yes, the GAP would cover the new loan term and balance.
I have GAP and am going to refinance my loan - Does the GAP transfer to the new loan?
GAP could transfer to the refinanced loan. However, if any money is added to the loan or the term extended
when the loan is refinanced, GAP will not cover these changes. The GAP you purchased is an Addendum to the
loan contract on which it was sold. Any changes to the original loan terms can affect the GAP coverage.
Can GAP be transferred to a different vehicle?
No, it cannot be transferred to a different vehicle.
I am refinancing my loan at another financial institution – can the GAP transfer to my new loan?
No, the GAP is nontransferable.
I am going to have additional funds added to my loan – do I need to purchase a new GAP enrollment?
Yes. Any additions or modifications to your loan will not be covered unless you purchase a new GAP enrollment.
The GAP you originally purchased is an addendum to the loan on which it was sold so any monies added to the
loan would not be covered.
My car has been totaled. Should I continue to make payments on my loan?
Yes, continue to make your loan payments and notify a Pentagon Federal Credit Union representative of the total
loss as soon as possible.
Auto Gap insurance refund/canceling Gap insurance/pro-rated refund of Gap insurance.
Your GAP coverage may be cancelled anytime in the first 60 days for a full refund. After 60 days the coverage is
non-refundable.
How do I know when I don't need GAP insurance anymore?
When the payoff amount of your loan approximates the book value of your vehicle. The payoff value of your loan
should be available from your loan company's website. You can check the value of your vehicle at kbb.com.
Can I buy this same type of coverage through my dealer?
Yes you can! But you will find GAP rates sold through dealerships are generally much higher than auto gap
insurance online.
How is my deductible covered by GAP?
The primary insurance deductible is covered as part of your unpaid loan balance; it is not “reimbursed”. GAP
covers the difference between the actual cash value (ACV) of your vehicle and the outstanding loan balance.
Since your insurance company pays ACV less the amount of your deductible, the “gap” is increased by this
amount. When your loan balance is paid off by GAP the deductible is paid as part of that balance.
If my primary insurance pays off my loan balance in full does GAP reimburse me for my deductible?
No, see “How is my deductible covered” question above. You did not actually pay for the deductible, so GAP
does not pay the deductible back to you.
Can I purchase my salvage (totaled vehicle) back from my insurance company?
If you purchase your salvage from your insurance company, they will deduct this amount from what they pay.
The amount of this deduction will not be covered by GAP.
Does GAP cover towing and storage expenses?
No, it does not cover towing and storage expenses.
If I am past due on my loan, how does this affect the GAP settlement?
GAP will cover past due payments up to 30 days, if you are past due more than that, the past due payments will
be deducted from the GAP settlement. This includes skipped payments as part of a lender skip a pay program.
GAP does not cover any late charges.
Is there a deadline to file a GAP claim?
GAP claims must be filed within 60 days from the date of your primary carrier’s settlement.
How do I receive payment for the GAP claim?
The GAP claim settlement is paid to the bank, finance company, or credit union that financed the purchase of
your vehicle and applied to your loan.
I have a service warranty policy on my vehicle – does this affect the GAP claim?
GAP does not cover the refundable portion of any service warranty or full term credit life insurance since you can
obtain this reimbursement back by canceling the policies with the appropriate companies.
What are the underwriting rules for GAP insurance?
Generally speaking, the following rules apply:
Maximum APR of the auto loan: 12.5% However, this doesn't necessarily mean you can't get GAP insurance.
What this usually means is the insurance company will pay out based on a maximum 12.5% APR. If your auto
loan was written at 21% for example, you would still be responsible for the difference in interest. As always,
check with the issuer to determine the exact terms.
Maximum term: 84 months for auto loans; 60 months for auto leases/balloon loans. This should not be an
issue in most cases, since most loans do not go beyond the 60 month range.
How long do I have to get GAP Insurance?: Loan/Lease can be enrolled in coverage if financed with within the
last 12 months.
Gap coverage limited to:
120% of MSRP (new vehicles) or NADA retail (used vehicles) plus 30% for dealer Adds (like service contracts,
credit life, etc.)
NOTE: A consumer who is financed above these levels certainly needs gap coverage; however in case of a
claim, it’s likely the consumer will have some leftover gap deficiency to pay off.
Vehicle age limitation: Current model year minus 8 years (2009 model year: vehicle must be 2001/newer).
Vehicles:
Private passenger autos, trucks, vans, RV's, and motorcycles. No heavy commercial-use vehicles; no livery or
delivery type vehicles are eligible.
Maximum loan amount financed:
$100,000. Vehicles Financed with Open-End Line of Credit or Revolving Credit are Not Eligible. No single
payment of irregularly amortizing loan contracts.
Is Gap available in every state?
Gap insurance is not available in all states. The following states: CT, LA, NY, VA, WA have not allowed the sale
of gap insurance in the past. Check with your insurance company or your state's office of insurance
commissioner for current status.
Can I sue my GAP insurance company?
As with any business transaction, disputes will occur. Whoever mediates your claim will base their decision on
the evidence provided to them by you. Evidence, in this case, relates to signed contracts and any
communication, including emails, you have had with the insurer or their representatives.
If the dialogue with the insurance company or its representatives fails to satisfactorily resolve your problem, the
next step would be to file a complaint with the Consumer Protection Bureau of the state where you reside. The
Consumer Protection Bureau is usually a division of the State Attorney General's office. It should cost you
nothing to pursue this option.
A second course of action would be to retain an attorney. This of course would involve a fee, and once you've
retained an attorney you will not be able to pursue your complaint through the offices of your state government.
agent or contact your insurance company directly.
Some insurance companies do not offer gap coverage but might instead offer Loan/Lease Payoff coverage or
New Car Replacement coverage to customers for an additional fee.
How do I pay for the GAP coverage?
Normally, GAP is financed in with your loan. You may be able to pay the full GAP fee up front in one payment
Does GAP replace my comprehensive and collision coverage?
No, GAP is not a substitute for collision or property damage insurance.
Can I buy GAP on a salvage/reconstructed titled vehicle?
No. Salvage or reconstructed title vehicles are not eligible for GAP.
I am refinancing my loan. Can I purchase GAP at that time?
Yes, the GAP would cover the new loan term and balance.
I have GAP and am going to refinance my loan - Does the GAP transfer to the new loan?
GAP could transfer to the refinanced loan. However, if any money is added to the loan or the term extended
when the loan is refinanced, GAP will not cover these changes. The GAP you purchased is an Addendum to the
loan contract on which it was sold. Any changes to the original loan terms can affect the GAP coverage.
Can GAP be transferred to a different vehicle?
No, it cannot be transferred to a different vehicle.
I am refinancing my loan at another financial institution – can the GAP transfer to my new loan?
No, the GAP is nontransferable.
I am going to have additional funds added to my loan – do I need to purchase a new GAP enrollment?
Yes. Any additions or modifications to your loan will not be covered unless you purchase a new GAP enrollment.
The GAP you originally purchased is an addendum to the loan on which it was sold so any monies added to the
loan would not be covered.
My car has been totaled. Should I continue to make payments on my loan?
Yes, continue to make your loan payments and notify a Pentagon Federal Credit Union representative of the total
loss as soon as possible.
Auto Gap insurance refund/canceling Gap insurance/pro-rated refund of Gap insurance.
Your GAP coverage may be cancelled anytime in the first 60 days for a full refund. After 60 days the coverage is
non-refundable.
How do I know when I don't need GAP insurance anymore?
When the payoff amount of your loan approximates the book value of your vehicle. The payoff value of your loan
should be available from your loan company's website. You can check the value of your vehicle at kbb.com.
Can I buy this same type of coverage through my dealer?
Yes you can! But you will find GAP rates sold through dealerships are generally much higher than auto gap
insurance online.
How is my deductible covered by GAP?
The primary insurance deductible is covered as part of your unpaid loan balance; it is not “reimbursed”. GAP
covers the difference between the actual cash value (ACV) of your vehicle and the outstanding loan balance.
Since your insurance company pays ACV less the amount of your deductible, the “gap” is increased by this
amount. When your loan balance is paid off by GAP the deductible is paid as part of that balance.
If my primary insurance pays off my loan balance in full does GAP reimburse me for my deductible?
No, see “How is my deductible covered” question above. You did not actually pay for the deductible, so GAP
does not pay the deductible back to you.
Can I purchase my salvage (totaled vehicle) back from my insurance company?
If you purchase your salvage from your insurance company, they will deduct this amount from what they pay.
The amount of this deduction will not be covered by GAP.
Does GAP cover towing and storage expenses?
No, it does not cover towing and storage expenses.
If I am past due on my loan, how does this affect the GAP settlement?
GAP will cover past due payments up to 30 days, if you are past due more than that, the past due payments will
be deducted from the GAP settlement. This includes skipped payments as part of a lender skip a pay program.
GAP does not cover any late charges.
Is there a deadline to file a GAP claim?
GAP claims must be filed within 60 days from the date of your primary carrier’s settlement.
How do I receive payment for the GAP claim?
The GAP claim settlement is paid to the bank, finance company, or credit union that financed the purchase of
your vehicle and applied to your loan.
I have a service warranty policy on my vehicle – does this affect the GAP claim?
GAP does not cover the refundable portion of any service warranty or full term credit life insurance since you can
obtain this reimbursement back by canceling the policies with the appropriate companies.
What are the underwriting rules for GAP insurance?
Generally speaking, the following rules apply:
Maximum APR of the auto loan: 12.5% However, this doesn't necessarily mean you can't get GAP insurance.
What this usually means is the insurance company will pay out based on a maximum 12.5% APR. If your auto
loan was written at 21% for example, you would still be responsible for the difference in interest. As always,
check with the issuer to determine the exact terms.
Maximum term: 84 months for auto loans; 60 months for auto leases/balloon loans. This should not be an
issue in most cases, since most loans do not go beyond the 60 month range.
How long do I have to get GAP Insurance?: Loan/Lease can be enrolled in coverage if financed with within the
last 12 months.
Gap coverage limited to:
120% of MSRP (new vehicles) or NADA retail (used vehicles) plus 30% for dealer Adds (like service contracts,
credit life, etc.)
NOTE: A consumer who is financed above these levels certainly needs gap coverage; however in case of a
claim, it’s likely the consumer will have some leftover gap deficiency to pay off.
Vehicle age limitation: Current model year minus 8 years (2009 model year: vehicle must be 2001/newer).
Vehicles:
Private passenger autos, trucks, vans, RV's, and motorcycles. No heavy commercial-use vehicles; no livery or
delivery type vehicles are eligible.
Maximum loan amount financed:
$100,000. Vehicles Financed with Open-End Line of Credit or Revolving Credit are Not Eligible. No single
payment of irregularly amortizing loan contracts.
Is Gap available in every state?
Gap insurance is not available in all states. The following states: CT, LA, NY, VA, WA have not allowed the sale
of gap insurance in the past. Check with your insurance company or your state's office of insurance
commissioner for current status.
Can I sue my GAP insurance company?
As with any business transaction, disputes will occur. Whoever mediates your claim will base their decision on
the evidence provided to them by you. Evidence, in this case, relates to signed contracts and any
communication, including emails, you have had with the insurer or their representatives.
If the dialogue with the insurance company or its representatives fails to satisfactorily resolve your problem, the
next step would be to file a complaint with the Consumer Protection Bureau of the state where you reside. The
Consumer Protection Bureau is usually a division of the State Attorney General's office. It should cost you
nothing to pursue this option.
A second course of action would be to retain an attorney. This of course would involve a fee, and once you've
retained an attorney you will not be able to pursue your complaint through the offices of your state government.
Automobile Gap Insurance FAQ's
The following Gap insurance FAQ's should be used as a general guide to help you make an informed decision
when purchasing Gap auto insurance coverage.
Although every effort has been made to ensure the accuracy of this FAQ, differences in coverage options and
State laws governing individual insurers make it impossible to provide the most accurate information for every
situation.
Who Sells Gap Insurance?
Gap insurance is usually available as an add on from the dealership where you purchased your new or used
car. This is always the most expensive option. Please see the Buyers Guide on this site for more information on
the least expensive options.
The following Gap insurance FAQ's should be used as a general guide to help you make an informed decision
when purchasing Gap auto insurance coverage.
Although every effort has been made to ensure the accuracy of this FAQ, differences in coverage options and
State laws governing individual insurers make it impossible to provide the most accurate information for every
situation.
Who Sells Gap Insurance?
Gap insurance is usually available as an add on from the dealership where you purchased your new or used
car. This is always the most expensive option. Please see the Buyers Guide on this site for more information on
the least expensive options.
Gap Auto Insurance Coverage FAQ's
| GAP Auto Insurance Coverage |
