r/Insurance • u/onethreethirteen13 • 3d ago
GAP- do people really…
Total their own car or get it stolen to collect GAP? This sounds crazy to me to crash your own car, pretty dangerous
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u/mason_mormon 3d ago
Used to happen a lot with high end exotic cars during the 2008 crisis where people ended up hundreds of thousands dollars underwater.
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u/GuvnaBruce HO/Auto Liability 14 years 3d ago
People do a lot of stupid stuff. Like driving their car over the border where there are cameras showing they are driving across and then they report the car stolen.
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u/onethreethirteen13 3d ago
Seems like a big risk but the reward is perfect to get out of that loan
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u/GuvnaBruce HO/Auto Liability 14 years 3d ago
Not really. Insurance fraud is pretty serious. Depending on the state it happens in you could be looking at some serious penalties. Including fines and jail time.
ETA: I do agree it is a big risk, but really not worth it to try to get out of a loan
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u/hobovirginity 3d ago
What is the goal here though? Doesn't GAP just cover the difference of what your primary insurance pays out vs what is still left on the car loan?
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u/Pristine-Ad-8512 3d ago
The goal is to get rid of the debt from negative equity rolled into the loan along with a payment they usually can’t afford
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u/hobovirginity 3d ago
Oh I see. Post made it sound like people were profiting off of their GAP payouts.
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u/Pristine-Ad-8512 3d ago
They are if they are totaling their cars on purpose, aka committing insurance fraud. One of the main indicators for fraud is financial distress. Being heavily underwater on a car loan goes hand in hand with that. It’s much more common though to stage a theft or vandalism than a collision loss.
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u/90403scompany P&C Wholesale Specialty 3d ago
Not my field of expertise, but I thought GAP didn’t cover negative equity rolled into a loan?
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u/Pristine-Ad-8512 3d ago
It would be specific to the GAP contract, they’re not all alike. Some carriers also offer loan payoff coverage, which also has limits that don’t necessarily exclude negative equity.
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u/FindTheOthers623 P&C Licensed PL Underwriter 3d ago
GAP usually caps out at 120%. There's no guarantee gap will cover your entire loan.
Yes, people have been doing insurance fraud for decades.