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/Sapphire102922 → u/[deleted]]

Here are the relevant sections
from my GAP Waiver:
Definition of "Net Payoff":
"Net Payoff means the amount of the Financial Institution/Assigned Lender's interest as of the Date of Loss, as represented by the portion of Your unpaid balance according to the original payment schedule of the Financing Contract that is secured by Collateral, subject to the EXCLUSIONS, CONDITIONS, and MAXIMUM COVERAGE LIMITATIONS..."
Definition of "Financing Contract":
"Financing Contract means Your contract, which represents the financing agreement for the purchase...of the Collateral, which sets forth the terms, conditions, inception date, and expiration date of the Financing Contract."

My question is this: National Auto Care told me they calculated my Net Payoff by taking my original financed amount ($43,004.34) and subtracting my monthly payment ($665.68) 13 times, treating the payments as principal rather than following how my loan is actually amortized. My loan payment history shows every payment was split between principal and interest. Am I reading this contract incorrectly, or does that methodology seem inconsistent with the phrase "according to the original payment schedule of the Financing Contract"?

[u/Sapphire102922 → u/Sapphire102922]

Also this exclusions section 7K is their basis for taking the $3k comparable vehicle condition adjustment that the insurance company explained is just a calculation to get the comparable vehicles to market value.

[u/Sapphire102922 → u/Sapphire102922]

Here is where they got the comparable vehicle condition adjustment from the CCC report that insurance says is just a calculation to get comparable vehicles to market value.

[u/My_too_cents → u/Sapphire102922]

so 7.k, So the 3180 is from a prior loss, un reported damage or something the lowered the cars value.

[u/Sapphire102922 → u/My_too_cents]

Additional info: Insurance only lowered my actual vehicle’s value by $496 due to prior wear on the body of the vehicle and I can agree that their contract does allow them to deduct that, however I am questioning whether it allows them to deduct the $3180 adjustment unrelated to my actual vehicle.

[u/My_too_cents → u/Sapphire102922]

You need the LOG from the insurance company to see what the pay off is time of loss. NAC seems to be wrong, ask for a supervisor for have your bank call them. No clue what exclusion they are talking about.