Melanie Musson is the fourth generation in her family to work in the insurance industry. She grew up with insurance talk as part of her everyday conversation and has studied to gain an in-depth knowledge of state-specific insurance laws and dynamics as well as a broad understanding of how insurance fits into every person’s life, from budgets to coverage levels. Through her years working in th...

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Written by Melanie Musson
Published Insurance Expert Melanie Musson

Dan Walker graduated with a BS in Administrative Management in 2005 and has been working in his family’s insurance agency, FCI Agency, for 15 years (BBB A+). He is licensed as an agent to write property and casualty insurance, including home, auto, umbrella, and dwelling fire insurance. He’s also been featured on sites like and Safeco. He reviews content, ensuring that ex...

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Reviewed by Daniel Walker
Licensed Car Insurance Agent for 15 Years Daniel Walker

UPDATED: May 10, 2021

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When you are in an accident or there is another event that causes so much damage to your vehicle that it needs to be replaced, having GAP insurance refund can come in really handy. This is because your regular insurance may not pay out as much as it will cost to replace your vehicle, and the GAP coverage will take care of the additional amount. GAP coverage is also used when vehicles are stolen.

How Does GAP Coverage Work?

Getting a GAP Insurance Refund

Cars are expensive, and if yours is stolen or totaled in an accident, you may not be able to afford to replace it. There is going to be a difference between what the vehicle is worth and how much you still owe on it, and GAP insurance will take care of this. So, if you are still making payments on your vehicle, you don’t have to worry about making payments on a vehicle that you no longer own.

Here is an example. A new car will cost $15,000. You make a $1,000 down payment then you arrange to make monthly payments of $300. If your car gets stolen after two months, the insurance company may say that it is worth less than the original price. It may be that it is only worth $12,000, even though you still owe more than $13,000. GAP insurance will pay the difference.

What If You Lease Your Vehicle?

It is a good idea to have GAP insurance if you are leasing a vehicle. After all, you are not the owner of the vehicle, but you are responsible for it should anything happen. Lease payments are often very low, and the amount you pay for a leased vehicle is usually much less than what the vehicle is actually worth. If you have an accident, you are required to pay for the damages, so having GAP coverage is going to be a big help. It may even be that in order to lease a vehicle, you will be required to carry this type of coverage.

What If You No Longer Need It?

If you decide that you don’t need this coverage and you want to discontinue it, you may be able to get a GAP insurance refund. You may have paid off the vehicle or traded it in for a different or newer model. If you paid for your coverage in full, you can get part of that money back. This is not the same if you lease the vehicle and the GAP coverage is included in your payments.

To learn more about GAP coverage and to get quotes, you can go online to make the job a lot easier. Just tell us what you need and give us your zip code, and in a few seconds you’ll have a list of insurers in your area and what they charge. You may not need it, but if you have an expensive vehicle you make payments on, it is a good idea to know that you can get a GAP insurance refund.