If you decide to purchase gap insurance on your own, read the contract and policy disclosures carefully before signing the agreement. Unlike gap insurance that comes with most leased vehicles, which you don't have the option to cancel for a refund, you may or may not have the option to get a refund for insurance you purchased.
Gap insurance applies to a specific car loan and thus is non-transferable to a new owner. When it comes to getting a refund, different insurers have different timelines and guidelines for cancelling gap insurance. For example, your insurer may have a "full or nothing" refund policy, in which you can get a full refund if you cancel within 60 days but the policy becomes nonrefundable if you cancel after that period elapses. Another insurer may have a shorter full refund period, but a longer time line before the policy becomes nonrefundable.
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Getting an Automatic Refund
You may receive a refund without taking any action. If you purchased gap insurance through your lender and then sell or refinance the car, the policy will cancel automatically when you pay off the loan and you may receive a prorated refund within a few weeks of completing the sale.
Request a Refund
Most insurers have a gap insurance cancellation form you'll need to fill out and submit along with any required supporting documentation, such as a copy of the loan payoff statement. If the insurer does not provide a cancellation form with the policy documents, contact the customer service department for specific instructions. This includes information you may need to include in a cancellation letter and required supporting documents, if any.
Make and retain copies of all correspondence and record the date and name of anyone you speak with. Send the cancellation via certified mail with a return receipt request to verify the insurer receives the notice.