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How do I drop gap insurance from a car loan?
I purchased gap insurance on my car loan three years ago. I don't think I need it anymore. How do I drop it from my loan?
Emily Maracle · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
Purchasing
gap insurance
is a smart idea when you first get a car loan due to depreciation. But once you reach a break-even point, gap insurance becomes an unnecessary expenditure.Before deciding to drop gap insurance, confirm your loan balance and the value of your vehicle. If your car is now worth more than the balance of your loan, you would no longer need gap insurance.
If the balance of your loan is more than the value of your car, keep gap insurance on your car. Since gap insurance pays the difference between what you owe and the value of your car, you may end up owing money if your car is
totaled without gap insurance
. If you still want to drop gap insurance, contact your gap insurance provider, which is often a lender, car dealership, or
car insurance
company. A simple phone call should allow you to drop coverage. Double-check your statement in subsequent months to ensure the gap insurance has been removed.When you purchase gap insurance through a dealership or lender, it’s typically paid for up-front and lasts the life of your loan. If you cancel before your car is paid off, you should get a refund. If it’s through a car insurance company, you’ll see a reduction in your monthly payments or premium.
If you are dropping gap insurance from your car insurance policy, shop around with other companies. Changing coverage on your policy is a great time to comparison shop and ensure you’re paying the lowest price for insurance.
You can do this by using
Jerry
. Jerry gathers the top quotes from up to 50 providers for the best rate in seconds so you always get the best rate for yoru coverage needs.View full answer
- Gregory R.
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