Why might I need GAP insurance in the first place?
Some people who purchase GAP insurance want to cancel it because they aren’t sure what it does for them. Understanding the role of GAP insurance is important for anyone with an auto loan. If you’re thinking about canceling GAP insurance, make sure you fully understand the coverage you’re giving up before terminating your policy.
GAP is an acronym for Guaranteed Asset Protection or Guaranteed Auto Protection. But, besides being an acronym, GAP insurance covers a literal gap that arises when your car is totaled or stolen, but your auto insurance payout falls short of your remaining loan balance. In this situation, the result is the aforementioned gap.
Say you have a $25,000 auto loan balance, but your car is only worth $20,000. If you’re the victim of car theft or totaled your car in an accident, fire, or natural disaster, your auto insurance can cover the claim by compensating you $20,000 – the market value of the car at the time the loss occurred. Unfortunately, that still leaves you with a $5,000 loan balance. GAP insurance is designed to protect you from this exact situation, and if you have a GAP policy, it can waive the last $5,000.
When is GAP insurance most important?
GAP insurance is most important in the early years of your loan. That’s because in your first year of new car ownership, your car will likely depreciate by around 20% (and around 15% each year for the next four years). As a result, GAP insurance tends to be most important during the first 5 years of a car’s life.
You only need GAP insurance if your auto loan balance is higher than your car’s market value. Once your car value is greater than the loan balance, it usually makes sense to cancel your GAP coverage and see if you’re owed a refund.
How can I cancel my Hyundai GAP coverage?
If you understand your GAP policy and are ready to move forward with canceling, follow these 4 steps:
1. Locate your GAP agreement
Your GAP agreement will have instructions on who to contact and how to cancel your GAP coverage, as well as any processing or cancellation fee that might apply.
2. Determine which provider issued your GAP policy
Hyundai of Chantilly’s website has a specific page dedicated to canceling certain products, including GAP insurance. (We tried calling the Hyundai of Chantilly finance team for more information but were unable to reach them.) In addition to the Hyundai Protection Plan, their website lists the following GAP and total loss providers.
- Assurant/Driver’s Plus
- Audi Pure Protection
- Automotive Warranty Services
- BMW Guaranteed Auto Protection
- Nation Safe Drivers (NSD)
- Safe-Guard Products International
- Volkswagen Drive Easy
- Warrantech Automotive, Inc.
3. Contact your GAP insurance provider
Once you know the provider of your GAP insurance, contacting them directly is the best way to make sure you have the most up-to-date information on how to cancel your policy. If you bought your coverage from a Hyundai dealership, call, email, or visit that dealership to find out what you need to do to cancel your policy.
4. Complete a cancelation form and send in any required documents
Your GAP provider will be able to share any necessary forms for canceling your GAP coverage, along with any other documentation they might require.
Some GAP insurance providers have a specific form you have to complete to successfully cancel your GAP coverage. In other cases, such as at Beaverton Hyundai, you may be able to cancel your GAP policy online by filling out a simple online form.
Make sure you follow the instructions of your GAP provider exactly, which can often include providing a copy of a payoff letter or an odometer reading.
When should I cancel my Hyundai GAP coverage?
Canceling Hyundai GAP coverage is a personal choice, though it makes the most sense to do so in the following situations:
- You sell your Hyundai
- You trade in your Hyundai for another car
- You end your Hyundai lease
- You pay off your auto loan
- You purchased a different GAP policy
- Your car’s value is greater than your loan balance
FAQs
Do you get a refund for canceling GAP insurance?
If you paid for your GAP insurance up front, you might receive a prorated refund for any unused portion of the policy. If you cancel your GAP policy within 30 days after purchase, you should receive a full refund.
Can I cancel GAP insurance on a car with a loan?
You can usually cancel GAP insurance on a car with a loan. However, some lenders require you to maintain GAP insurance as part of your loan agreement, so make sure to review your auto loan contract carefully before canceling your GAP coverage.
Is Hyundai GAP insurance required?
If you purchased your car, Hyundai GAP insurance is optional. If you’re leasing a Hyundai directly through a Hyundai dealership, GAP insurance is usually included as part of your lease.
When is it smart to cancel GAP insurance?
Canceling GAP insurance is smart when you no longer need the coverage it provides. Selling or trading in your car and paying off your auto loan are a few examples of when it makes sense to cancel your GAP insurance.
Why didn’t I receive my GAP refund after canceling?
If you didn’t receive your refund after canceling GAP insurance, the payment may have been sent to the company that issued your auto loan. If you’re canceling GAP coverage after paying off your auto loan, make sure to include a copy of the payoff letter in your cancellation request.
Do I need GAP insurance if I bought my car with cash?
If you purchased your car with cash, you don’t need GAP insurance. GAP insurance is only useful if you have a car loan.
What is the maximum GAP insurance payout?
According to our research and several Hyundai dealerships’ websites, Hyundai GAP insurance will pay out up to $50,000 in covered losses.
Does GAP insurance pay for a blown engine?
GAP insurance doesn’t cover a blown engine, faulty brakes, a dead battery, or any other car problems. GAP insurance only pays for the leftover loan balance when your auto insurance payout falls short of covering your loan balance after the total loss or theft of your vehicle.
Sources
Hyundai Protection Plan, Inc. “Guaranteed Asset Protection (GAP).” Hyundai Motor Finance, 2015. Accessed Dec. 2022.
Voss Hyundai. “GAP Insurance Refunds.” Accessed Dec. 2022.
Hyundai of Chantilly. “Product Cancelation FAQ.” Accessed Dec. 2022.
Progressive. “Is gap insurance through the dealership required?” Accessed Dec. 2022.
Hyundai of Mesquite. “Hyundai GAP Insurance: What’s the Deal?” Accessed Dec. 2022.
Popely, Rick. “Car Depreciation: How Much It Costs You.” CARFAX, 26 Apr. 2021. Accessed Dec. 2022.
Jonathan is a writer with over 10 years of experience and a former insurance agent. Jonathan’s focus is to simplify personal finance and help equip you with the tools you need to make smart financial decisions. Despite the criticisms, he remains committed to driving a manual transmission and prides himself on smooth shifting, even in rush-hour traffic.
