Can I Cancel Gap Insurance From Dealership?

Updated April, 2020

Yes, you can normally cancel gap insurance if you no longer need it. If you cancel your gap insurance, you will get a refund according to the length of time of your insurance policy. 

Why do you need gap insurance?

If you are financing a new car, lenders will require to have full insurance coverage (collision + comprehensive). If your car is totaled or stolen, your full insurance policy will cover only the value of the car at the time it was damaged/stolen.  

Gap insurance is an add-on to your full coverage. This insurance will protect you when you owe more on your lender than what your car is worth. 

Learn how Gap Insurance works and determine if it's a good option for you.

How does gap insurance work?

If you bought a new car for $30,000 and you still owe $25,000 on your lender, your full coverage insurance policy will pay the depreciated value of the car (let's say $22,000).

Without gap insurance, you will still need to pay $3,000 out-of-pocket. If you have the gap insurance policy as an add-on to your full coverage, your insurance company will pay the remaining $3,000. 

Find the best car insurance companies that offer gap insurance coverage and get dozens of free quotes. You can get started, here!

When to consider gap insurance?

Gap insurance is very affordable insurance coverage, but you will need to buy comprehension and collision coverage first. If you think that at some point, you will owe more than the value of the car, it's a good idea to get gap insurance. 

You should consider gap insurance when:

  • Financing your new car
  • You made a small payment (or not at all) on a new car
  • Your car loan is longer than 3 years

Fill out the questionnaire and let our agents help you determine if you need gap insurance coverage. You can do that fast and completely free, here! 

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