How to Stop Gap Insurance Coverage

How to Stop Gap Insurance Coverage
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Gap insurance covers the gap between your car's market value and the amount you still owe on an auto loan. While gap insurance serves an important purpose, you may no longer be in a financial position to pay the policy premium or you may have paid down or paid off your car loan and therefore want to cancel. Successful cancellation depends on communication and follow-through.

Locate your original gap insurance contract. Gap insurance can be purchased from the car dealership, lender or insurance company. Regardless of where it was purchased, a separate gap insurance contract should have been given to you. Read the contract to understand the terms and process for cancellation. Make note of any fees and timing for cancellation.

Call your insurance agent. Let them know you want to end the coverage and when you wish to do so. Ask your insurance agent to send you a cancellation form and learn how and when you will receive the form.

Ask for a refund. If you prepaid any of the policy premiums or paid for the entire policy in advance, you should receive a pro-rated refund for the period of time that you paid for, but are not going to use. If a refund is due to you, ask for a date when you’ll receive the money.

Fill out the form provided by the insurance company that allows you to end gap coverage. You may receive the form from the company via mail, fax or email, or you may be able to download and print the form from the insurance company website. Have your account number handy and know the date that you wish to end coverage. Follow the directions and complete all sections.

Return the completed paperwork to the insurance company. Use the company's preferred method of communication. Some companies want an original signature and will ask you to mail the form back while others may encourage you to submit the form electronically online. Coverage will stop once the provider receives and processes the form.


  • Communicate with the insurance company directly as your car dealer or bank lender may not know the specifics of the gap policy, even if they sold it to you. Follow up with a phone call to the insurance company to make sure your cancellation form was received.

    Mark your calendar with the date when you were told your refund check would arrive and call the insurance company if it does not arrive on time. Write down the names and dates of your communications with the insurance company in case follow-up phone calls are necessary.


  • Consider your reasons before cancelling and understand the risks if you still owe more on your car loan than what your car is worth.

    Find out whether you will be charged any fees for early cancellation and if so, find out when you can cancel without having to pay a fee.

    Cancelling your gap insurance policy results in a loss of revenue for the insurance company. Be persistent if the company seems to be dragging its feet on stopping your gap insurance.