Volkswagen (VW) is one of the largest car companies in the world, selling hundreds of thousands of vehicles each year in the United States (U.S.) alone. Along with car sales, VW also sells Guaranteed Asset Protection (GAP) insurance.
If you’ve had Volkswagen Drive Easy Guaranteed Asset Protection for a while, you might be contemplating canceling this added coverage, and we’ll tell you exactly how to do it. If you’re still on the fence, we’ll help you decide if it makes sense to keep or cancel your GAP policy.
What you need to do to cancel Volkswagen Drive Easy GAP coverage
To cancel Volkswagen GAP coverage, contact the dealership where you purchased your VW GAP policy or reach out to the GAP administrator.
The administrator of Volkswagen GAP can vary by state or dealership, but in most cases, it’s Safe-Guard Products International. If you purchased your VW in Indiana, VWFS Protection Services is likely the administrator. We’ve included the contact information for both companies below.
Safe-Guard Products International
Two Concourse Parkway, Suite 500
Atlanta, GA 30328
VWFS Protection Services
2200 Ferdinand Porsche Drive
Herndon, VA 20171
If in doubt, refer to the instructions in your original GAP agreement.
What is the purpose of GAP insurance?
Volkswagen’s GAP coverage protects you from the possibility that you might owe money on your auto loan after your car is stolen or totaled. Now, you might be thinking your auto insurance coverage will pay for that, and it will – but it might not cover the full balance on your loan.
When you finance a vehicle purchase, your car often depreciates faster than you pay down the loan, especially in the early years of the loan. As a result, you might end up with a loan balance that’s greater than the actual market value of your car.
What does that mean? Let’s take a look at a real-life example.
How does Volkswagen GAP work in real life?
You just bought a brand-new Volkswagen Tiguan. With the dealer fees, the total price came to just over $40,000. You put down $4,000 and financed $36,000. As you may already know, cars typically lose 10% of their value when you drive them off the lot.
Just days after you bring your new Volkswagen Tiguan home, you’re the victim of a hit-and-run accident. Fortunately, you emerge unscathed, but the same can’t be said for your new Volkswagen. You call the police and file a claim with your insurance company, but the other driver is nowhere to be found.
One week later, you receive a call from your insurance company. They declare your Volkswagen a total loss and inform you they’ll be sending a check to your lender for $32,000 – the book value (i.e., the current market value) of your car.
While you’re grateful to have your auto insurance claim settled quickly, the problem is that the $32,000 insurance payout still leaves you with a $4,000 loan balance. Luckily, that $4,000 loan balance is covered by Volkswagen’s GAP plan, so you don’t have to pay any money out of pocket, except your auto insurance deductible (Note: The Volkswagen Drive Easy GAP Plus benefit covers your insurance deductible up to $1,000, though it may not be available at all dealerships.)
What else does GAP insurance cover?
Besides a total loss caused by a car accident, GAP insurance will also pay out if your car is stolen. If your car is totaled as a result of a fire, vandalism, or any act of nature (such as hurricanes, flooding, and tornadoes), GAP insurance can also pay the remaining loan balance.
What is not covered under GAP insurance?
The exclusions under Volkswagen’s GAP coverage (and all GAP insurance) include:
- Vehicle repairs
- Extended warranties
- Claims denied by your auto insurance company
- Extended warranties
- Penalties or fees for late payments or missed payments
- Repossessed cars that are past the redemption period
- Previous loan balances rolled into a new loan
When should I cancel my Volkswagen GAP insurance?
If you need help deciding when to cancel your Volkswagen GAP coverage, consider whether any of the following scenarios below are true. If you answered yes to any of them, it’s usually a good sign it’s time to cancel your GAP policy.
- You purchased a new GAP policy for the same vehicle
- You sold your car
- You traded your car in for a different one
- You paid off your auto loan
- Your car is worth significantly more than the remaining amount on your auto loan
Since GAP insurance is typically very affordable (often just $20 per year), it’s usually worth having, especially in the early years of your loan.
Successfully canceling Volkswagen GAP insurance can take anywhere from 4 – 6 weeks.
If you paid for your GAP insurance up front and you cancel early, you may get a refund for any unused portion of the policy.
The maximum amount VW GAP insurance pays is the lesser of $50,000 or the remaining amount on your loan. So, if you have a $3,000 balance on your loan after your auto insurance pays out, your GAP insurance will only pay a maximum of $3,000.
If you want to cancel your GAP insurance by writing a letter, make sure to include the following information:
- Your name and contact information
- The effective date of cancelation
- Your car’s information (year, make, model, and VIN number)
- Your signature
If you have a payoff letter from your lender, be sure to include a copy along with your cancellation letter.
If you refinance, you may get a prorated refund for the unused portion of your old GAP policy. When refinancing, you’ll pay off your existing loan, but keep in mind you might still need GAP coverage for your new auto loan.
Like other insurance coverage, nothing happens if you don’t have to use your GAP plan. You’ll only need to file a GAP claim if your car is stolen or totaled and your auto insurance doesn’t cover the remaining loan balance.
GAP insurance will not pay for a blown engine or any other problems with your vehicle. GAP insurance only applies to your auto loan, not the vehicle itself.
Volkswagen Credit. “Volkswagen Drive Easy Guaranteed Asset Protection Plus and Lease-End Protection.” Jan. 2017. Accessed Jan. 2023.
Volkswagen. “Guaranteed Asset Protection.” Jun. 2019. Accessed Jan. 2023.
Suntrup Volkswagen. “What Does Gap Insurance Cover?” Accessed Jan. 2023.
Gusner, Penny. “What Gap Insurance Does — and Does Not — Cover.” Fox Business, 12 Jan. 2016.
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.