Is GAP insurance a waste?

Posted: Thu Feb 04, 2010 05:39 am Post Subject:

Let me see if I have the math correct (I'm going to ignore that you paid $11,00 for a $7,400, for now):

$11,000 loan
-$7,400 value
--------------------------
$3,600 left
-$500 ded
-------------------------
$3,100 left
-$770 prior damage that you mentioned
--------------------
$2,300 left

I think I used all of the numbers. You say that GAP paid $200 but I come up with $2,300. Now, this number came up in your post but you state that it's the amount refunded on your _extended warranty_. Is this correct. It's odd that the amount I come up with that GAP should pay on the loan is the amount you mentioned that they paid on your extended warranty. Plus... I don't think GAP pays the amount you can cash in on the extended warranty... I think this is paid from the extended warranty company. Is it possible that GAP paid $2,300 and not the $200 you mentioned?

The prior damage is another issue. Yes, if you caused the damage I can see why GAP would not pay for this. Was this damage on the vehicle when you bought it? Is there a way to prove this? Perhaps this might change things. What was this prior damage? Perhaps your carrier should not have deducted $770 from the value of the vehicle for this. Was the $770 the cost they came up to repair this damage?

Posted: Thu Feb 04, 2010 10:52 am Post Subject: Gap insurance

Gap insurance is indeed good for new cars provided you get the right terms and coverage. We need to know what prior damage you are talking about. It is not surprising here that they do not want to pay for the prior damages, especially the ones that were there before you bought the car. The condition of a car is an important factor in its valuation.

Posted: Thu Feb 04, 2010 12:51 pm Post Subject:

Todd you're off 500.00 that 7400.00 was AFTER her 500 ded...so they ACV was 7900.00

Progressive said the car was worth $7,400 after the $500 deductable.

They don't pay prior damages, and any car in the world is going to have something wrong with it

What was worth $770 on my car? A busted tail light, a small rip in the seat, a chip in the window, and a couple small dents. Yeah, that's it

(And some of this stuff was there when I bought the car!)

I am canceling the GAP coverage on our replacement vehicle and signing up with Progressive's "Loan and Lease" which has nothing to do with the condition of the car, just the loan itself, although it only pays up to 25% above market value.

As long as the used car you buy is close to bluebook value, you won't have to worry about a gap in payment.

Yeah, $30 a year is worth that.

Posted: Thu Feb 04, 2010 01:47 pm Post Subject:

Here's the thing, many people think GAP is a waste of money until they need it. Many think that if they purchase a vehicle close to the ACV amount, they are safe, not always the case. As Lori and T have pointed out, you need to go back and check your figures.

Posted: Thu Feb 04, 2010 03:54 pm Post Subject: Reply

I'm going to try and reply to all of you at once, lemme see... the dents were on the car when I bought it, I even paid $500 to partially fix one, the rock chip may or may not have been, the rip (tiny though it was) and the tail light were my fault. Believe me, I made the argument about some of the damage being there when I bought the car, they didn't care.
Now, let me give you the ACTUAL numbers so the math is correct. I did make one mistake - the ACV value of the car was $7413.00, but then they added tax and minued the deductable for a total of $7714.15. Sorry about that. GAP took that total and minued it from what was due on the car: 11,024.57 which equals 3310.42. I will soon receive a check for my cancelation of my extended warranty for 1718.75, and a GAP insurance refund of 602.33 (yes, I paid a lump sum from the dealership) which totals
2321.08. GAP minued that out of what they owe me, (989.34) along with the 770.00 they weren't going to pay. That equals 219.34, which was what they paid me.
We all know how good these inspectors are. Unless you're a fanatic that won't park next to other cars in a parking lot so you won't get dented, chances are, they will find some minor damage on your car unless you totaled it beyond all recognition. The longer you own it, the more damage will happen. Yu have kids or pets, just ups the chances more. Besides, it says right on the back of the thing you sign at the dealership that they will not pay prior damage OR wear n tear. (Wish I would have seen that.) My arguement is that GAP should be protecting the lein holder from a loss on their end. What they pay should be the gap between what insurance pays and what you owe. It shouldn't matter what condition the car was in beforehand. Many people were shocked when I told them about my situation. I'm just letting people know that this could happen to you. If you still believe in GAP on a used vehicle, then get the gap from your insurance company as well - trust me, I asked them outright if they pay prior damages - they said yes, in essence they do because THEY only care about the money on the loan, not the vehicle's condition. I think I answered everything... if not, lemme know.

Posted: Thu Feb 04, 2010 05:03 pm Post Subject:

Here is some info I found on GAP insurance:

http://www.irmi.com/expert/articles/2005/ryles06.aspx

"A review of GAP policies shows remarkable similarity in both coverages and exclusions. Notable exclusions include the following:

Overdue lease/loan payments
Financial penalties imposed under a lease for excessive use
Security deposits not refunded by the lessor
Costs for extended warranties, credit life insurance, or other insurance purchased with the loan or lease
Amounts deducted by the primary insurer for wear and tear, prior damage, towing, and storage
Carry-over balances from previous loans or leases
Equipment added to the car by the buyer, meaning that only factory-installed equipment is covered
Readers will quickly note that "GAP" may still leave a gap in one's financial obligations once the exclusions are applied."

I think you have a good point and I'm not sure I agree with the amounts paid by the GAP carrier or perhaps the insurance company. Its important to understand that GAP is usually not offered by an insurance company, is not really "insurance" and as such, is not regulated very well.

Posted: Thu Feb 04, 2010 10:16 pm Post Subject:

I think there is a good point made though, to first of all check the rates!!! You can all most always bet that anything you buy at a car lot or thru the lein holder will be higher priced than you can get else where...case in point what she paid for the GAP policy at the dealership and what she can purchase it for from her own carrier...

Also, I don't have any problem with PED being deducted from a vehicles ACV...a car with a broken tail lamp is worth less than one with a sound one..period.. wear and tear..well that's where it get's sticky...is a broken lamp wear and tear? nope...are door dings in an 02 sure...but it would depend (again) on just how bad they are..If this carrier was using a retail price for their ACV..then this makes perfect sense..

Believe me, I made the argument about some of the damage being there when I bought the car, they didn't care.

Posted: Fri Feb 05, 2010 01:57 am Post Subject: reply

It wasn't the dealership that said that, it was both Progressive and GAP that didn't care that the prior damage was there before I bought the vehicle. Also, its cheaper at Progressive because they only cover 25% above market value. The GAP you get at a dealer is 90% above market value. The replacement car I got has a loan amount (including the service contract) of $7,700 which is much cheaper than the buick was, so I don't feel that I need coverage up to 90% above market value, especially when we're planning on paying it down quickly since the payments are less.
I still feel that I need to make the arguement that the condition of the vehicle should have nothing to do with GAP insurance. I think people are confusing GAP with regular auto. I understand why Progressive doesn't pay any prior damages to the accident, but GAP is there to protect the lein holder, like I said before. Think of it this way. Say you totaled your car and it was just a mangled hunk of metal afterwards. No prior damage assessment can come from that. So you're telling me that GAP will only pay for what the car looks like now? A hunk of metal? You see what I'm saying? It's unfair to make an assessment on a vehicle because it's still in tact. If it wasn't in tact, would they pay me anything at all? :shock:

Posted: Fri Feb 05, 2010 02:41 am Post Subject:

I still feel that I need to make the arguement that the condition of the vehicle should have nothing to do with GAP insurance.

I think people are confusing GAP with regular auto.

but GAP is there to protect the lein holder

Think of it this way. Say you totaled your car and it was just a mangled hunk of metal afterwards. No prior damage assessment can come from that. So you're telling me that GAP will only pay for what the car looks like now? A hunk of metal?

If it wasn't in tact, would they pay me anything at all?

Posted: Fri Feb 05, 2010 03:55 pm Post Subject: Yeah...

GAP didn't protect me at all. Yes, $219 payment was nice... gee, it was almost as much as my normal car payment, but had it been a couple years down the road, I wouldn't have gotten a refund for my GAP insurance, although I possibly would have gotten something back for my service agreement, and technically might have owed MORE on the car then, then I do now. The prior damage amount would have been higher... and well, I don't see how GAP helped me. The car I have now was a fleet vehicle, although an '05, it's still got prior damage. The console is cracked, and I assume that's not cheap to fix. There are a couple of dents as well, and I have a feeling I would get "charged" more for this prior damage than on the Buick, so what's even the point? Oh yeah... the point is, people: be aware!