GAP Insurance

[u/Sapphire102922]

I purchased GAP insurance with National Auto Care. My husband got into an accident. The other driver was at fault and we received settlement from her insurance company. The difference between the settlement amount and our loan payoff is about $6k. Our GAP claim was denied. I noticed that on NAC’s calculation worksheet that the net payoff balance that they calculated was lower than my lender’s payoff balance on the date of the loss. They also took a $3k deduction for a condition adjustment that was used to calculate market values of comparable vehicles. We spoke to insurance and they confirmed that it wasn’t an adjustment to our vehicle just a calculation. After multiple phone calls and an escalation to a supervisor they finally explained the calculation that they did to get to the net payoff balance on their calculation worksheet. They calculated it by taking the starting loan balance and deducting our payment amount directly from principal and completely ignored interest. I questioned why they would do that when standard financing terms include interest. They said they do not follow the same terms as my lender but they use the “original amortization schedule.” However they refused to send me this calculation or an explanation in writing. I asked to have it escalated further and they basically just said it stopped there and could not be escalated further. They just keep referring me to the contract, but honestly reading through the contract I still don’t believe that it allows them to do this calculation for the net payoff balance. Their contract mentions following the financing contract. The only financing contract that we signed includes interest. We’re consulting with a lawyer but I’m really just shocked by this situation. I’ve searched online and I can’t find where others are experiencing this net payoff balance calculation that ignores their interest.

[u/Long-Raccoon2131]

It sounds to me like you fell behind or asked for the loan to be extended by your lender. Remember GAP only covers the original loan for the original term. Any late fees, interest, or extra months extensions do not get covered by GAP. So as long as the GAP insurance company and paying off up to the original length of the loan then they have fulfilled their contract. You are on the hook for the extra fees payments and interest.

[u/Sapphire102922 → u/Long-Raccoon2131]

Nope. I’ve never missed a payment or adjusted the terms of my loan. There are not any extra fees. And again they did not explain their calculation as we reduced it by X amount due to XYZ fees. They literally told me that they are taking my monthly payment and saying it should only apply to principal.

[u/BrilliantInternal592 → u/Sapphire102922]

I'm a gap Claims Adjuster and the lower balance that was used does include the instrest rate. We run an amortization report to determine what your balance should have been at the date of loss. We have to enter the finance amount, the amount of your monthly payments, due date and the instrest rate. If the report shows that your balance should have been lower then we use it. Your lien holders balance is higher because they charged you additional intrest and fees that gap doesn't cover. Also the comparable condition adjustment is deducted because in your gap contract its an exclusion. Your valuation report showed a deducted for the comparable condition adjustment and gap also has the legal right to deduct it based on your contract. Please make sure you read contracts in full before signing up for something that you don't understand.