In the event you total a car you still owe money on, filing GAP coverage claims may be in your future
Guaranteed Auto/Asset Protection, or GAP insurance, is a form of coverage that's intended to protect your investment by covering any outstanding unpaid liability you might owe on your car loan in the unfortunate event that the vehicle is stolen or deemed a total loss after an accident. Auto insurance GAP claims aren't any fun to deal with, but a decent GAP policy can literally be the difference between walking away from one crashed car to buy another one just as good, and recovering from a collision only to find that you are now without a car and several thousand dollars in debt.
Assessing damage/loss
The first step in filing any GAP coverage claims will be to assess the total damage to your car. In the event that your car is stolen and not recovered, this is pretty easy. When an insured vehicle crashes or is crashed into, it's not uncommon for a carrier to "total," or pay out the maximum claim benefit on the vehicle. This maximum is usually pegged at the current market value of the car, regardless of what's owed on it, minus whatever deductible applies for the particular coverage a claim will be filed on.
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This is how you can agree to buy a car for $25,000, total it on the way home and find out your insurance will only pay you $18,000. In this case, your GAP liability would be $7,000 plus whatever prepayment penalties your lender assesses to make up for lost interest. Your collision insurance provider will have to let you know how much is going to be covered before your GAP policy can, well, plug the gap, if you will.
Streamlining the process
Often, GAP coverage is offered by the same company that handles your general policy, which greatly streamlines the process of filing a claim. In a case like this, it's usually enough to simply file one claim and present a document from your lender to establish the exact amount of the remaining balance of the loan. In cases where the policy providers are different, however, don't wait to hear from your collision provider before activating a GAP claim. There are deadlines for filing, and there's no harm in leaving the exact amount unstated until everybody else has done what they need to.
Denial can happen
Something to be aware of in this process is the possibility of GAP denial. This can happen if your primary claim has been denied for some reason. Remember that GAP coverage is only intended to cover the difference between your total liability for the vehicle and the amount you've been paid by your primary carrier. If it isn't attached to a collision or comprehensive policy to begin with, your GAP policy carrier has no point of reference for how much to pay and will respond in the traditional manner of an insurer — by not paying a dime.
Keeping all this in mind can greatly ease the unpleasant business of filing GAP coverage claims and help to get you back on the road quickly.
If you haven't added GAP coverage to your car insurance policy and aren't sure if you should, it might help if you spend some time with an experienced car insurance agent who can help you make that determination. An agent can also easily show you some sample policy proposals with varying levels of coverage and cost. Reply! can help by putting you in contact with local car insurance agents familar with the details of GAP coverage claims and all other policy options.