My GAP Insurance Refuses to Payoff The Total I Owe On the Car


Dear Steve,

I purchased a used car for my daughter added a gap waiver. My daughter totalled the car insurance paid their part gap insurance paid less than balance due which the gap waiver is supposed to cover now bank says no because they cite some interior damage but the waiver doesn’t list exceptions just that if the amount is less than owed it will be waived. Do you have any advice for how to get the balance off my credit?

Any advice on gap waivers and how to get the balance owed waived like they promised.



Dear Debra,

Well first you are going to have to solve the issue of exactly why they won’t cover the full amount. They might have told you it’s because of some interior damage but I suspect it’s not the primary issue.

GAP (Guaranteed Auto Protection) insurance is supposed to cover the difference between what you owe of the car and the remaining loan. However there are balances GAP won’t cover, like negative equity when the loan was taken out. This typically happens with add-ons rolled into the loan or when previous loan amounts owed are added into the new car loan.

Unless you can get a definitive reason from the insurance company and you can verify it in the copy of your GAP policy I don’t think you have any good option other than to speak with a consumer attorney with auto issue experience or file a complaint with your state Attorney General office or state Insurance Commissioner office.

The debt being reported is simply the byproduct of the underlying dispute over the insurance coverage. That’s the issue that needs to be resolved first.


You are not alone. I'm here to help. There is no need to suffer in silence. We can get through this. Tomorrow can be better than today. Don't give up.

Damon Day - Pro Debt Coach

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