Gap liability insurance provides coverage for any difference between your outstanding car loan balance and your auto insurance company's vehicle valuation. If your car is totaled due to a collision, accident or weather-related incident, your automobile insurance company will establish a value for your car. Gap insurance pays off your car loan or leasing obligation if the established value is less than your outstanding balance. Terminating your existing gap liability insurance policy depends on your financing arrangement, coverage requirements and the policy details.
Step 1
Review your gap liability insurance policy. Read the contract and determine the regulations and termination requirements. If you do not have a written policy contact the dealership where you purchased or leased your car for program details. Specifically review the policy for cancellation processes and financial penalties. If you lease your vehicle, check with the leasing company to establish its gap liability requirements.
Step 2
Cancel your gap insurance. Contact your gap insurance provider and request a cancellation form. If no form is available, ask what information is required in a cancellation requests such as cancellation number, Social Security number or other contract information. Submit your signed cancellation form and record the date of your request.
Step 3
Confirm your cancellation. Call the insurance provider and follow up on your cancellation request. Allow sufficient time for your letter or cancellation form to arrive and be processed. If your provider has not processed your request within a few weeks, ask for a fax number or alternative cancellation method to finalize your request quickly.
Step 4
Wait for a rebate check. Some gap insurance is paid up-front when you purchase or lease your vehicle, some policies require a yearly payment and some plans include a portion of the premium expense in a monthly lease or loan payment. Depending upon the method payment, you may be eligible for a pro-rated refund. If you do not receive a check in a timely manner, follow up with the plan administrator.
Step 5
Most leased agreements for automobiles have built-in gap insurance. You can stop paying for this gap insurance coverage at the end of your lease period or by breaking the lease early. Early termination may result in financial penalties, so weigh the cost of early termination versus your ongoing lease and gap insurance payment.
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