How Long Does It Take for Gap Insurance to Pay Out? - Policygenius (2022)

If you total a new car that you’ve leased or financed with a loan, a basic auto insurance policy might only pay out the actual cash value of your car, which may not be enough to pay off the remainder of your loan or lease.

But gap insurance, sometimes short for “guaranteed auto protection,” will cover the gap between your car’s actual cash value after depreciation and the money you still owe in lease or loan payments. Your auto lender or lessor may require you to add gap insurance to your policy, in addition to collision coverage and comprehensive coverage, to ensure you’ll be able to pay for the vehicle even if it’s totaled before the lease or loan ends.

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It could take anywhere between five and 45 days for your auto insurer to pay out gap insurance after a claim. The exact amount of time varies based on the complexity of your claim and the regulations in your state. Typically, these payments are sent straight from your insurance company to your lienholder or lessor.

Key takeaways

  • Your gap insurance will pay out within 30 to 45 days of filing a claim with most insurers

  • The exact time frame for gap insurance to pay out will vary based on state regulations and the complexity of the claim

  • Gap insurance payments are typically sent directly from your car insurance company to your auto lender or lessor

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What is gap insurance?

When you total a car, comprehensive and collision insurance will pay you the actual cash value, or ACV of the car, but the ACV takes depreciation into account. The more a car is driven, the less it is worth, so at the time of an accident, your car’s ACV may not be enough to pay off the rest of a lease or loan.

If the ACV is less than the amount you still owe on your lease or loan, you’ll continue to owe your lienholder or lessor for the car, even though it isn’t in drivable condition. Gap insurance will pay off the difference between your car’s ACV and the amount left on your lease or loan, and the payment will generally go to your lessor or lienholder directly.

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Let’s say you financed your car for $20,000, then you totaled it a year later in a covered collision. Your car will have already depreciated in value because of normal usage, so your car insurance company may only pay out, say, $14,000. But since you’re only a year into your two or three year term, you also still have payments left to make on the car. If the amount of money you still owe on the car is greater than the $14,000 that your car is currently worth, gap insurance would cover that difference, letting you complete the remaining payments and leaving you free to lease or buy a new vehicle.

How long does it take for gap insurance to pay?

Most insurers will process a payment within 30 to 45 days of a claim being filed. Remember that gap insurance can only pay out after the rest of the claim is settled, because it fills in the gap between what you received for the damage and what you still owe on your loan or lease.

In some states, insurers can also take as long as a month to agree to cover the damages. Others have different rules: Texas, for example, requires payments to be made within five days after an insurer agrees to pay for the claim. This means that the actual time frame for gap insurance to pay out will vary based on state regulations and the complexity of the claim.

Most insurers will let you check up on the status of a claim after you’ve filed it, so you should be able to track what stage your claim is in. You’ll also have a claims adjuster, or representative, who you can contact with questions about the status of your claim.

Where does the gap insurance pay out go?

In general, car insurance claims settlements can go to you or directly to a repair shop that is fixing your car after a covered incident. With gap insurance, since the point of the coverage is to pay off the remainder of the lease or loan, the payment would go straight to the lessor or lienholder, paying off the rest of the cost and leaving you free to finance or lease another car.

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How do I know if I have gap insurance?

You can find out if you have gap insurance by checking your declarations page which lists the coverage included in your policy. You may be able to access both documents online or confirm your coverage information by calling your insurance provider directly.

Where to buy gap insurance

Most major insurers offer gap insurance as coverage you can choose to add when you buy your policy. If you don't have it already and you finance or lease a new car, you can add gap insurance on to your policy when you update it.

You can make additions to your policy and coverage amounts, as well as add additional drivers or new vehicles to your policy by contacting your insurance company over the phone or online. Many major insurance companies also have an app, allowing you to access and modify your policy at any time.

Other car insurance coverage for loaned and leased cars

Almost every U.S. states require you to have a minimum amount of car insurance, specifically liability coverage, which pays for injuries and property damage you cause with your vehicle. However, your state’s requirements are just a starting place, and your lienholder or lessor will likely require you to have more than your state’s minimum amount of required car insurance.

In addition to gap and liability insurance, your lienholder or lessor may also require you to add comprehensive and collision coverage to your policy. Comprehensive coverage protects your vehicle if it’s damaged in a non-driving peril such as extreme weather, theft, or a fallen object. Collision coverage, often paired with comp, offers financial protection after your car collides with another vehicle, person, or object, no matter who was at fault.

Both comp and collision coverage protect your car itself, and can pay for the costs to repair severe damage but only up to your car’s ACV if it gets totaled. Gap insurance can cover your remaining payments on the car and the depreciation gap between both amounts, making it important coverage to add when you finance or lease a vehicle.

New car replacement vs. gap insurance

Gap insurance pays off the remainder of the loan or lease, so you can't use that money on a new car. You can buy a new car of the same make and model, however, with new car replacement coverage, another optional add-on that will pay out more than the ACV of your totaled vehicle.

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The big difference to note between gap insurance and new car replacement coverage is that gap insurance pays your lessor or lienholder the difference between the ACV and what you still owe in payments. New car replacement pays you the difference between the ACV and what it would cost to replace your totaled car with one of a similar make and model, so that you can go out and buy a brand new car to replace your totaled one.

New car replacement coverage is only available for cars that are one- or two-years-old, so you’ll want to add it to your policy as soon as you lease or finance a new vehicle. Some insurers sell it in combination with gap insurance, but the cost of new car replacement coverage varies by insurer.

Frequently Asked Questions

When does gap insurance not pay?

Gap insurance won’t pay if your car just needs regular repairs. It also won’t pay for a new car or a rental car after an accident. Gap insurance only pays out when your car is considered a total loss after an accident or if it’s stolen.

Can you get gap insurance after you buy a car?

Gap insurance can be added to your new car purchase at a dealership in addition to being offered as an optional policy add-on, but adding it to your insurance policy can sometimes be cheaper than getting it through your dealership. Some insurers require your car to be no older than two or three model years in order to add gap insurance to your policy.

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What is a total loss?

A car is deemed a total loss when the cost to repair it after an accident is over a certain percentage of what it’s actually worth. It’s up to your insurance company to determine whether your car is a total loss, but if your insurer considers your vehicle a total loss, you’ll typically hand it over to them.


How long does it take for Gap to refund? ›

Gap insurance refunds usually take 4-6 weeks. Staying in contact with your gap insurance provider and promptly returning signed paperwork can expedite the process, though.

Does gap insurance pay full amount? ›

Our GAP insurance Policies Pay Out In Cash

If you didn't finance the vehicle (or the finance had already been cleared by the time of the claim), the whole sum is paid directly to you. This payment is made with no strings. You can use it against the cost of buying any car from any dealership of your choice.

What is the most gap insurance will pay? ›

Gap insurance will pay the difference between the amount you still owe on a vehicle and actual cash value (ACV) paid out by your car insurance company. Lease/loan coverage typically has limitations on how much it will payout, such as 25% over the determined ACV of your vehicle. Both are minus your deductible.

How long do insurance companies take to pay out? ›

Once an insurance company has admitted liability and agreed to process the claim, they tend to move quickly. Some claimants receive their compensation in a few days. More commonly, the claimant will receive their compensation payment within 2 and 4 weeks.

How does GAP insurance refund work? ›

You'll only receive a refund for the GAP insurance that you haven't used. For example, if you cancel your policy after three months of coverage, you'll only get a refund for the remaining nine months (if you paid for a year of coverage). The amount of your refund is based on how you pay your insurance bill.

Why would I get a gap refund check? ›

Guaranteed auto protection (also known as GAP insurance) is an insurance policy providing reimbursement if your car is totaled or stolen, and you still owe money on the car's auto loan. If you cancel your GAP insurance policy early, you may qualify for a GAP insurance refund.

How does GAP insurance work on a financed car? ›

Gap insurance—also known as guaranteed auto protection—reimburses a car owner when the payment for a total loss is less than the outstanding loan or lease balance. Gap insurance is only needed for a short period of time while the loan value is greater than the overall value of the car being leased or financed.

Does gap cover excess? ›

Please review the policy wording for full details on all exclusions. 12. Does GAP Insurance cover excess charges from my main insurer? Yes.

How long does GAP insurance last for? ›

You can purchase GAP Insurance products for between 2 and 5 years, in the case of Total Loss Gap. Please note, the maximum term of cover our insurance company will allow is for 5 years of your vehicle ownership.

Will gap insurance cover a blown engine? ›

Will gap insurance cover engine failure? No, gap insurance does not cover engine failure. Gap insurance is an optional coverage that can be included in an auto insurance policy. If you have gap insurance, it will pay the difference between the book value of your totaled car and the amount you still owe on it.

Does gap insurance cover negative equity? ›

Does gap insurance cover negative equity? Yes. Negative equity is another term for the gap between what you owe on your auto loan and the car's actual value.

Is gap insurance for a car worth it? ›

Gap coverage is worth it only as long as you are leasing a car or if you owe more on a loan than your car is worth. You don't need gap insurance if you don't have a car loan or lease. You won't need gap insurance forever. Drop gap insurance once your car loan is less than the value of your vehicle.

How long should insurance claim take? ›

The time that it takes an insurance claim to finalise could be anywhere between a week, a month or even a year. It depends on a number of factors, such as the type of claim, the complexity of the situation, how severe the damage is and how many people are involved in the process.

How long does it take for compensation to be paid? ›

From the day your compensation amount is settled, it could take up to 28 days for you to receive your payout. But in many cases, this will be much faster. You may be able to get your compensation within just a few days after a settlement is agreed when dealing with certain insurers.

Why do insurance companies delay settlements? ›

Insurers use delays and other tactics to try to deny injury victims what they are rightfully owed, and we put our extensive experience to work to successfully thwart these tactics and recover maximum compensation on behalf of each client we serve.

Do banks refund gap insurance? ›

Gap insurance is often calculated for the lifespan of your loan. If you refinance your loan and cancel gap insurance, you may be eligible for a refund of the unused portion. The refund will be for unused premium only, so you won't get the full amount that you paid.

Can you get a refund on unused gap insurance? ›

You can usually receive a gap insurance refund if you pay off your loan early or trade in your vehicle. Your refund depends on the value of the car, the loan amount, the car's mileage, and your loan repayment period. Gap insurance refunds are usually issued within several weeks.

Is gap insurance refund after payoff? ›

Refunds. You do not get your full GAP coverage refunded back to you once you pay off your car. When you pay your GAP insurance premium in advance, you are entitled to a refund of the unused portion if you pay off your vehicle early.

What does GAP Waiver mean? ›

A gap waiver, also known as a gap addendum, is a supplement that you can add to your auto loan or lease. A gap waiver is a debt cancellation agreement which absolves you from paying the difference between what you owe on the vehicle and what it's worth if the vehicle is declared a total loss.

How do I get a refund on my extended car warranty? ›

How to get your money back. You can cancel an extended warranty at any time and you'll get a prorated refund for the unused portion of your policy. If the warranty was included in your loan, your car payment won't drop, but you may pay off the car sooner after the refund is deducted from your balance.

Does GM financial lease include gap insurance? ›

Answer provided by. Yes, GM Financial does offer gap insurance as a policy option for your new GMC vehicle!

Can you get a refund on unused gap insurance? ›

Lump Sum Payment: By paying off the gap insurance refund policy in advance, you are then entitled to a refund on the unused portion. Monthly Payments: If you pay your premiums monthly, you won't be able to get a refund on any past months. However, you may get a small refund if you cancel early in the month.

How long do Gap UK returns take? ›

This may take up to 7 days. Returns are charged at £2.50 per return made. If you paid for the order by credit/debit card, any charges will be deducted from your refund.

How long does Old Navy take to refund money? ›

How Long Does It Take For Refund To Show in My Account? Refunds typically take 3-5 business days for credit card refunds and 1-3 days for debit cards.

Does gap accept returns without receipt? ›

Gap's Return Policy: Unwashed, unworn, or defective items may be returned to any Gap store within 45 days of original purchase date. Full refund will be given if items are returned with a a valid receipt. Without an original receipt, Gap stores may require valid identification when processing all returns and exchanges.

What does GAP Waiver mean? ›

A gap waiver, also known as a gap addendum, is a supplement that you can add to your auto loan or lease. A gap waiver is a debt cancellation agreement which absolves you from paying the difference between what you owe on the vehicle and what it's worth if the vehicle is declared a total loss.

How do I get a refund on my extended car warranty? ›

How to get your money back. You can cancel an extended warranty at any time and you'll get a prorated refund for the unused portion of your policy. If the warranty was included in your loan, your car payment won't drop, but you may pay off the car sooner after the refund is deducted from your balance.

What is the purpose of gap insurance? ›

Gap insurance stands for Guaranteed Asset Protection insurance. It is an optional, add-on coverage that can help certain drivers cover the “gap” between the financed amount owed on their car and their car's actual cash value (ACV), in the event of a covered incident where their car is declared a total loss.

How long does it take for Gap to deliver? ›

Standard Delivery

Standard orders are processed once credit card authorization and verification have been obtained. Orders shipped via standard delivery typically arrive in four (4) to seven (7) business days (Monday through Friday, not including holidays) for the United States, US Territories and P.O.

How do I know if a Gap item is final sale? ›

Conversation. How do I know if a sale item on the website is "Final Sale" (no refund)? Great question! Final sale is indicated on the item description screen.

Does Gap do price adjustments? ›

Does Gap Do Price Adjustments? Yes. The store offers a Gap price adjustment on items purchased in-store that have gone on sale within fourteen days after your initial purchase. They'll happily refund you the extra money spent.

Are debit card refunds instant? ›

Whether you've paid with a credit or debit card, you can return your purchase and receive a refund. The main difference is how quickly your refund processes. It takes between seven and 10 business days for a debit card refund to be approved. For credit cards, it can take anywhere between three and seven days.

Does Old Navy have a time limit on returns? ›

You have up to 30 days from ship date to return or exchange items by mail that are purchased at Gap, Old Navy, and Banana Republic and up to 60 days from ship date to return or exchange items by mail that are purchased at Athleta.

What happens to Old Navy Super cash if you return? ›

What Happens With Old Navy Super Cash When You Make a Return? Super Cash has no cash value, so when you make a return, you will get back only the money you spent, not any of the value of your Super Cash. In addition, you will not get back the Super Cash reward coupon.

Can I return a Gap item to Gap Factory? ›

Here's a quick overview of how our brands handle returns and exchanges. Note: They can only be made at the brand of purchase (ie, Gap items can't be returned at Gap Factory, Old Navy, Athleta, Banana Republic, or Banana Republic Factory).

How do I contact Gap? ›

Call Toll-free

800-GAPSTYLE (800-427-7895).

Can you use Gap merchandise credit online? ›

Buy Gap Options eGift Card with Credit Card

Options gift cards can be redeemed at Gap, Old Navy, Banana Republic and Athleta stores across the US, Canada and Puerto Rico, and online at,,, and


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