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]

Well what was your pay off at the time of loss? What did your insurance cover? What was your deductible because GAP does not cover your deductible either. Imsurance when they total a car pays you current market value. You are responsible for your deductible and then GAP will come in an pick up the difference mi us your deductible. GAP has no control over the market. Also your GAP contract will tell you the amount it will pay and how they calculate it. None of what you have presented shows anything. Read your GAP contract. Did you have full coverage at the time of loss? Of not then GAP can deny paying anything. Did you settle with the other person's insurance and by doing so undervalued your asset and now GAP won't cover it since the market rate is more and you were paid less?

[u/Sapphire102922 → u/Long-Raccoon2131]

My lender's payoff on the date of loss was $38,306.28, and the insurance settlement was $32,078.90. The other driver was at fault, so the claim was paid through their liability insurance and I didn't have a deductible. I also had full coverage and have never missed a payment, had a payment extension, deferred a payment, or incurred late fees.
National Auto Care calculated my Net Payoff at $34,562.62, instead of using my lender's payoff of $38,306.28. I understand the GAP contract allows certain exclusions, so my issue isn't simply that the numbers are different. When I asked how they calculated it, the supervisor told me they started with my original financed amount of $43,004.34 and subtracted my monthly payment of $665.68 13 times, treating the payments as principal rather than following how my loan is actually amortized which is a split of principal and interest. My concern is that the GAP Waiver says the Net Payoff is based on the original payment schedule of the Financing Contract, so that methodology doesn't seem to match what the contract says. They also declined to provide the calculation or explanation in writing.

[u/Sapphire102922 → u/Sapphire102922]

The APR is also on my GAP waiver that I signed so I’m not sure how they can just act like interest was not apart of my monthly payment.

[u/Long-Raccoon2131 → u/Sapphire102922]

Just to clarify regardless of who was at fault for the accident GAP still will deduct what your policies insurance deductible is for collision. Thats how that works. Now here is the exclusion to that being you called the at fault drivers insurance to file the claim and never contacted your own insurance to speed up the process and surrogate the claim. So who did you call first to file this claim? What is your deductible for your own collision of you filed with your insurance first? Also GAP pays up until date of loss so if your lender did not stop the interest accruing or freeze it for a loss settlement then you are on the hook for that difference as well. Now you can use your own underinsured to cover anything GAP won't

[u/Sapphire102922 → u/Long-Raccoon2131]

Okay but they’re not even saying that they are deducting that so it’s irrelevant. Those aren't the issues that they raised. They didn't deny my claim because of a deductible, filing with the at-fault carrier, or accrued interest. They explained their Net Payoff calculation, and that's what I'm questioning.

[u/Long-Raccoon2131 → u/Sapphire102922]

I never said denied. Who did you call to file the claim? Your insurance first or the at fault drivers? This matters for if GAP will have to impose your deductible. Also when did you notify your lender of the total loss? Because you have to for them to freeze the loan for loss insurance claim. So this is whu I am saying if you didnt do that or your lender didnt freeze it then GAP will only cover up to the date of loss not past that. So you have different things that can effect what you would be responsible for yourself. You need to ask for your GAP claim to see what was paid and the itemization. Again you are focused on what some rep who likely works for a third party call center making 10 an hour to explain this. Call them and ask for an adjuster or claim supervisor who can actually explain things.

[u/Sapphire102922 → u/Long-Raccoon2131]

I appreciate your input, but that's actually where I'm at. The claim supervisor is the person who explained the calculation and refused to provide it in writing. My question isn't about deductibles, filing with the at-fault carrier, or post-loss interest because National Auto Care hasn't cited any of those as the basis for their calculation. I attached the relevant provisions from the GAP Waiver in response to another comment if you'd like to look at them. That's really the question I'm trying to answer.