Make Sure You’re Canceling The Right Policy

GAP insurance is different from collision insurance, liability insurance, and comprehensive auto insurance.

GAP insurance only takes effect after your car is totaled or stolen and when there’s a difference between your Honda’s current market value and the amount you owe on your auto loan. GAP insurance is optional coverage on your car, while auto insurance is a legal requirement in every U.S. state (except New Hampshire, where you’ll still have to prove that you meet their financial responsibility requirements).

Canceling Your Honda Care GAP Insurance

In most states, Honda appears to offer its own GAP insurance coverage known as Honda Care GAP. However, not all Honda dealerships will have Honda Care GAP available, and, as a result, Honda dealerships might partner with third-party GAP insurance providers instead. We called several Honda dealerships in an effort to get more information from their finance departments but were unable to get in touch with a representative who could share a list of Honda’s preferred GAP providers.

According to Honda’s website, Honda Care GAP is not available in Montana, Nevada, New York, Oregon or Texas.

If you have Honda GAP insurance, you may have paid for your policy up front, or it could be built into your monthly payments.

To cancel your Honda GAP insurance, start by contacting the dealership where you purchased the policy.

Even if the dealer sold you a policy that isn’t through Honda GAP Care, they should still be able to guide you through the cancellation process.

What if I don’t know who I bought my insurance from?

If you’re not sure who you bought the insurance from and don’t know where to start, check the original loan paperwork to see if you can find a GAP agreement. 

Did you purchase the car from a Honda dealership or a used-car dealership, or did you buy from a private seller? If you bought the car from a dealership, give them a call or send them an email asking if they can pull up the paperwork you signed.

To cancel your Honda GAP coverage, you’ll probably have to submit a cancellation request in writing to the dealership where you purchased your GAP coverage or to the insurance company directly. You might have to fill out a specific cancellation form, but in some cases, you may be able to cancel your GAP insurance online, over the phone, or by fax.

To make sure you cancel your GAP coverage as quickly as possible, refer to the cancellation instructions on the GAP insurance contract you signed when you purchased the policy.

When to Consider Canceling Your Honda Gap Insurance:

You could consider canceling GAP insurance if your car is more than a few years old since that’s when GAP insurance is most important. New cars are known to depreciate (lose value with time and use) quickly in their early years. The result is that the actual cash value (ACV) may be less than your vehicle loan amount. For instance, your car may only be worth $25,000, though your auto loan might still have a $30,000 balance remaining.

Since auto insurance without GAP coverage only protects your vehicle’s ACV, GAP is the only thing that can cover the $5,000 difference between those two figures. Once you own the car for several years and your loan balance is less likely to exceed your car’s value, GAP coverage becomes less important.

Besides owning your car for 4 – 5 years (or more), there are other circumstances where you might consider canceling GAP coverage, such as:

• You paid down a large portion of your loan and your car is now worth more than the loan amount
• Your financing term is less than 60 months and your auto loan balance is less than the car’s value
• Your vehicle depreciates slower than the average car (certain makes and models, like the Honda Civic tend to hold their value better than many other cars), and the current value of the car is greater than the current loan balance
• You’re selling your Honda
• You’re trading in your Honda for a different car
• Your Honda lease ended or you terminated your lease early

The key takeaway here is that you’ll probably cancel your GAP insurance in two situations: when you no longer have the car or when your car’s value exceeds the remaining balance on your vehicle loan.

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