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 Posted: Thu Feb 04, 2010 4:07 am Post subject: GAP Insurance a waste! |
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| I am having a horrible time with our totaled car. My husband and I had just bought this beautiful 2002 Buick Century in April 2009. We got GAP insurance on it through the dealership and had full coverage insurance through Progressive. My husband totaled the car in Dec '09 by running a curb at 50, popping the airbags, cracking the windshield... etc etc and totaled the vehicle. Well, because the vehicle was still mainly in tact after the accident, a prior damage assessment was done alongside the claims settlement and was sent to GAP insurance (AHIS) who automatically ignored it, because THEY don't pay prior damage to vehicles. It had $770 in prior damage that I now have to pay out of pocket for a car I don't own. GAP insurance may be good on a brand new car, but check out these numbers. We still owed over $11,000 on the car when it was totaled - we hadn't had a chance to pay much of it down. Progressive said the car was worth $7,400 after the $500 deductable. I'm getting a refund on the GAP and my extended warranty, equaling about $2300. What did GAP pay? $219 dollars. THAT'S IT. This car was worth WAY less than we owed, and GAP only payed $200. Be careful, people. They don't pay prior damages, and any car in the world is going to have something wrong with it. What was worth $770 on my car? A busted tail light, a small rip in the seat, a chip in the window, and a couple small dents. Yeah, that's it. (And some of this stuff was there when I bought the car!) I am canceling the GAP coverage on our replacement vehicle and signing up with Progressive's "Loan and Lease" which has nothing to do with the condition of the car, just the loan itself, although it only pays up to 25% above market value. As long as the used car you buy is close to bluebook value, you won't have to worry about a gap in payment. Yeah, $30 a year is worth that. |
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Katjaneway
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| Posted: Thu Feb 04, 2010 5:39 am Post subject: |
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Let me see if I have the math correct (I'm going to ignore that you paid $11,00 for a $7,400, for now):
$11,000 loan
-$7,400 value
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$3,600 left
-$500 ded
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$3,100 left
-$770 prior damage that you mentioned
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$2,300 left
I think I used all of the numbers. You say that GAP paid $200 but I come up with $2,300. Now, this number came up in your post but you state that it's the amount refunded on your _extended warranty_. Is this correct. It's odd that the amount I come up with that GAP should pay on the loan is the amount you mentioned that they paid on your extended warranty. Plus... I don't think GAP pays the amount you can cash in on the extended warranty... I think this is paid from the extended warranty company. Is it possible that GAP paid $2,300 and not the $200 you mentioned?
The prior damage is another issue. Yes, if you caused the damage I can see why GAP would not pay for this. Was this damage on the vehicle when you bought it? Is there a way to prove this? Perhaps this might change things. What was this prior damage? Perhaps your carrier should not have deducted $770 from the value of the vehicle for this. Was the $770 the cost they came up to repair this damage? |
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tcope
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| Posted: Thu Feb 04, 2010 10:52 am Post subject: Gap insurance |
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Gap insurance is indeed good for new cars provided you get the right terms and coverage. We need to know what prior damage you are talking about. It is not surprising here that they do not want to pay for the prior damages, especially the ones that were there before you bought the car. The condition of a car is an important factor in its valuation.
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scarlett
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| Posted: Thu Feb 04, 2010 12:51 pm Post subject: |
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Todd you're off 500.00 that 7400.00 was AFTER her 500 ded...so they ACV was 7900.00 | Quote: | | Progressive said the car was worth $7,400 after the $500 deductable. |
| Quote: | | They don't pay prior damages, and any car in the world is going to have something wrong with it |
Not true. There is a difference between prior damage and wear and tear... | Quote: | | What was worth $770 on my car? A busted tail light, a small rip in the seat, a chip in the window, and a couple small dents. Yeah, that's it |
Sorry, but Are you kidding me? Of course that was taken as prior damage...Think about it this way..What they were having to come up with was your vehicles ACV (actual cash value)...Now assume you have two 2002 Century's next to each other, one with a busted tail light (won't pass inspection), and a rip in the seat, a chip in the windshield and a couple of 'small' dents. Now which one is worth more? | Quote: | | (And some of this stuff was there when I bought the car!) |
Well if so then you SURELY brought these flaws to the attention of the salesman, or they to you and the price was reduced because of them. Also Progressive wrote that prior damage estimate but they did NOT take 100% of that damage correct? They likely took it at 70-80% right? So between April and December, you broke a tail lamp, ripped the seat, got a chip in the glass and these other dents is that right? | Quote: | | I am canceling the GAP coverage on our replacement vehicle and signing up with Progressive's "Loan and Lease" which has nothing to do with the condition of the car, just the loan itself, although it only pays up to 25% above market value. |
Better double check that prior damage doesn't apply to their coverage as well. I know that late charges, roll overs, warranties etc do not apply...(course some of this would be state dependent I'm sure) | Quote: | | As long as the used car you buy is close to bluebook value, you won't have to worry about a gap in payment. |
NOT blue book...NADA... | Quote: | | Yeah, $30 a year is worth that. |
I agree especially when you over pay this much for a vehicle...
Ok looks to me like you should owe $1270.00 on your note...(deductible of 500 and prior damage of 770)
11,000.00-balance
- 7400.00-Prog payment-ACV minus ded
- 2300.00-refund on GAP-and warranty
(I don't know how that's possible, unless you paid the
GAP it for a year maybe?)
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equals $1300.00-you owe...I don't see where the gap would've paid at all...assuming you rounded one way or the other...
In any event you'd owe your deductible of 500.00 (on most if not all GAP policys)...plus your prior damage...
One other options you have..is there any chance the dents and the tail lamp break happened at the same time? If so it may be worth turning in that claim..Do you have any idea how this other damage occured? (not the seat obviously or the w/s chip)...
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Lori
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| Posted: Thu Feb 04, 2010 1:47 pm Post subject: |
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| Here's the thing, many people think GAP is a waste of money until they need it. Many think that if they purchase a vehicle close to the ACV amount, they are safe, not always the case. As Lori and T have pointed out, you need to go back and check your figures. |
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Trench
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| Posted: Thu Feb 04, 2010 3:54 pm Post subject: Reply |
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I'm going to try and reply to all of you at once, lemme see... the dents were on the car when I bought it, I even paid $500 to partially fix one, the rock chip may or may not have been, the rip (tiny though it was) and the tail light were my fault. Believe me, I made the argument about some of the damage being there when I bought the car, they didn't care.
Now, let me give you the ACTUAL numbers so the math is correct. I did make one mistake - the ACV value of the car was $7413.00, but then they added tax and minued the deductable for a total of $7714.15. Sorry about that. GAP took that total and minued it from what was due on the car: 11,024.57 which equals 3310.42. I will soon receive a check for my cancelation of my extended warranty for 1718.75, and a GAP insurance refund of 602.33 (yes, I paid a lump sum from the dealership) which totals
2321.08. GAP minued that out of what they owe me, (989.34) along with the 770.00 they weren't going to pay. That equals 219.34, which was what they paid me.
We all know how good these inspectors are. Unless you're a fanatic that won't park next to other cars in a parking lot so you won't get dented, chances are, they will find some minor damage on your car unless you totaled it beyond all recognition. The longer you own it, the more damage will happen. Yu have kids or pets, just ups the chances more. Besides, it says right on the back of the thing you sign at the dealership that they will not pay prior damage OR wear n tear. (Wish I would have seen that.) My arguement is that GAP should be protecting the lein holder from a loss on their end. What they pay should be the gap between what insurance pays and what you owe. It shouldn't matter what condition the car was in beforehand. Many people were shocked when I told them about my situation. I'm just letting people know that this could happen to you. If you still believe in GAP on a used vehicle, then get the gap from your insurance company as well - trust me, I asked them outright if they pay prior damages - they said yes, in essence they do because THEY only care about the money on the loan, not the vehicle's condition. I think I answered everything... if not, lemme know. |
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Katjaneway
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| Posted: Thu Feb 04, 2010 5:03 pm Post subject: |
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Here is some info I found on GAP insurance:
http://www.irmi.com/expert/articles/2005/ryles06.aspx
"A review of GAP policies shows remarkable similarity in both coverages and exclusions. Notable exclusions include the following:
Overdue lease/loan payments
Financial penalties imposed under a lease for excessive use
Security deposits not refunded by the lessor
Costs for extended warranties, credit life insurance, or other insurance purchased with the loan or lease
Amounts deducted by the primary insurer for wear and tear, prior damage, towing, and storage
Carry-over balances from previous loans or leases
Equipment added to the car by the buyer, meaning that only factory-installed equipment is covered
Readers will quickly note that "GAP" may still leave a gap in one's financial obligations once the exclusions are applied."
I think you have a good point and I'm not sure I agree with the amounts paid by the GAP carrier or perhaps the insurance company. Its important to understand that GAP is usually not offered by an insurance company, is not really "insurance" and as such, is not regulated very well. |
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tcope
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| Posted: Thu Feb 04, 2010 10:16 pm Post subject: |
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I think there is a good point made though, to first of all check the rates!!! You can all most always bet that anything you buy at a car lot or thru the lein holder will be higher priced than you can get else where...case in point what she paid for the GAP policy at the dealership and what she can purchase it for from her own carrier...
Also, I don't have any problem with PED being deducted from a vehicles ACV...a car with a broken tail lamp is worth less than one with a sound one..period.. wear and tear..well that's where it get's sticky...is a broken lamp wear and tear? nope...are door dings in an 02 sure...but it would depend (again) on just how bad they are..If this carrier was using a retail price for their ACV..then this makes perfect sense.. | Quote: | | Believe me, I made the argument about some of the damage being there when I bought the car, they didn't care. |
Too late now of course, but I'd run not walk from a dealership like that...
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Lori
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| Posted: Fri Feb 05, 2010 1:57 am Post subject: reply |
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It wasn't the dealership that said that, it was both Progressive and GAP that didn't care that the prior damage was there before I bought the vehicle. Also, its cheaper at Progressive because they only cover 25% above market value. The GAP you get at a dealer is 90% above market value. The replacement car I got has a loan amount (including the service contract) of $7,700 which is much cheaper than the buick was, so I don't feel that I need coverage up to 90% above market value, especially when we're planning on paying it down quickly since the payments are less.
I still feel that I need to make the arguement that the condition of the vehicle should have nothing to do with GAP insurance. I think people are confusing GAP with regular auto. I understand why Progressive doesn't pay any prior damages to the accident, but GAP is there to protect the lein holder, like I said before. Think of it this way. Say you totaled your car and it was just a mangled hunk of metal afterwards. No prior damage assessment can come from that. So you're telling me that GAP will only pay for what the car looks like now? A hunk of metal? You see what I'm saying? It's unfair to make an assessment on a vehicle because it's still in tact. If it wasn't in tact, would they pay me anything at all?  |
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Katjaneway
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| Posted: Fri Feb 05, 2010 2:41 am Post subject: |
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| Quote: | | I still feel that I need to make the arguement that the condition of the vehicle should have nothing to do with GAP insurance. |
It is when going through a carrier. You can argue that sure, but when thats what the policy states it's pointless.
| Quote: | | I think people are confusing GAP with regular auto. |
I'm sure they do, especially if they have no idea how it works. Sorry, but you seem to fit in this group.
| Quote: | | but GAP is there to protect the lein holder |
It protects you at the same time
| Quote: | | Think of it this way. Say you totaled your car and it was just a mangled hunk of metal afterwards. No prior damage assessment can come from that. So you're telling me that GAP will only pay for what the car looks like now? A hunk of metal? |
You could think of it that way, but that is not how it works.
| Quote: | | If it wasn't in tact, would they pay me anything at all? |
No. Not in sense that you might think. The vehicle still has value in the current market, if there is anything left after the financial obligations have been met, then you would expect payment, but thats exluded from GAP. |
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Trench
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| Posted: Fri Feb 05, 2010 3:55 pm Post subject: Yeah... |
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| GAP didn't protect me at all. Yes, $219 payment was nice... gee, it was almost as much as my normal car payment, but had it been a couple years down the road, I wouldn't have gotten a refund for my GAP insurance, although I possibly would have gotten something back for my service agreement, and technically might have owed MORE on the car then, then I do now. The prior damage amount would have been higher... and well, I don't see how GAP helped me. The car I have now was a fleet vehicle, although an '05, it's still got prior damage. The console is cracked, and I assume that's not cheap to fix. There are a couple of dents as well, and I have a feeling I would get "charged" more for this prior damage than on the Buick, so what's even the point? Oh yeah... the point is, people: be aware! |
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Katjaneway
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| Posted: Sat Feb 06, 2010 12:55 am Post subject: |
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| Quote: | | and well, I don't see how GAP helped me. |
You answered your own question in your original post. It didn't pay the prior, it paid the finacial burden that you would have paid out of pocket had you not had the coverage. Thats how it helped you. |
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Trench
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| Posted: Sat Feb 06, 2010 1:22 am Post subject: |
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| Quote: | | The prior damage amount would have been higher |
See that's where you're wrong, and not understanding the difference between pre-existing damage, unrepaired prior damage, and wear and tear. The older a vehicle gets the more wear and tear is 'normal', and even expected and not ACV reducing..... | Quote: | | Also, its cheaper at Progressive because they only cover 25% above market value. The GAP you get at a dealer is 90% above market value. |
Ok, wait a sec here...first of all it's a given that you've made a REALLY poor financial decision, if you owe more than even 20% more than your vehicles value...But how on earth could you owe 90% ?  Your case is a perfect example...you were just under 15% upside down on your vehicle....(your payoff was 8703.49 after subtracting your warranty and GAP refund-the ACV was 7413.00-leaving a balance oweing of 1290.49 or 14.827% course your 500.00 deductible, and the 770.00 in prior damage then came off of this figure...) And in truth, had you not had any prior damage...you would've only been 6% or $520.48 upside down..
So you see 90% is really a ridiculous proposition, and frankly just fluff and double talk to charge the unsuspecting higher premiums (IMO)..
| Quote: | | The car I have now was a fleet vehicle, although an '05, it's still got prior damage. |
Oh boy...I hope you didn't pay full retail for this one! | Quote: | | The console is cracked, and I assume that's not cheap to fix |
Actually it is, you should be able to find a good used lid or even the entire console pretty cheap. | Quote: | | There are a couple of dents as well, and I have a feeling I would get "charged" more for this prior damage than on the Buick, |
If it's rough, sure you will...just like you didn't pay full retail for it because of this damage right? | Quote: | | so what's even the point? Oh yeah... the point is, people: be aware! |
I couldn't agree more...but I'd say...People be aware of what you are signing...Unfortunately Kate, Trench hit the nail on the head, and you admitted the same, when you posted | Quote: | | Besides, it says right on the back of the thing you sign at the dealership that they will not pay prior damage OR wear n tear. (Wish I would have seen that.) |
So to be totally honest here Kate, rather than warnings about GAP coverage, you should be warning people to read BEFORE they sign ANYTHING! right? 
Chalk it up to a life lesson...you'll never sign anything again without fully reading and understanding it will you  And as mistakes go this one was a pretty cheap one all in all
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Lori
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| Posted: Sat Feb 06, 2010 6:38 pm Post subject: Please Explain |
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Quote: See that's where you're wrong, and not understanding the difference between pre-existing damage, unrepaired prior damage, and wear and tear. The older a vehicle gets the more wear and tear is 'normal', and even expected and not ACV reducing....."
Maybe you can explain this to me a little better, because I would think that any damage that was on the vehicle prior to any accident would be minused by GAP. The longer I own the vehcile, the more things will happen to it. The seat'll get ripped again, or another rock chip, or maybe a small fender bender... tack on more money for the longer I own the car. Does it matter if the wear n tear is ACV reducing, because GAP says it won't pay for wear n tear either. By the time all this happens I would surely owe less on the loan itself, but pay more out of pocket for prior damages.
Quote: Your case is a perfect example...you were just under 15% upside down on your vehicle...."
You're absolutely right - I had never done the math for that, and it makes me feel much better canceling this GAP and getting the Loan and Lease from Progressive instead.
And about the '05 Malibu... I believe retail was higher than what they were selling the car for, but the salesman wouldn't budge on lowering the price anymore ($5,999) even though it was really close to having 100,000 miles on it. But carfax was squeeky clean and my mechanic said it was in really good condition. I actually didn't notice the dent near the trunk because the car is white and it's more like a dip than a dent, but I'm sure he wouldn't have lowered the price if I told him that either. It's a fleet vehicle and he said (yeah I know) that he was barely making any profit on it to begin with, plus they fixed a couple of issues we had found while test driving for free. *shrug* |
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Katjaneway
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| Posted: Sun Feb 07, 2010 2:38 am Post subject: |
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| Quote: | | Maybe you can explain this to me a little better, because I would think that any damage that was on the vehicle prior to any accident would be minused by GAP |
it is very confusing even for adjusters some times...so I totally understand your confusion...what a carrier is talking about (as it relates to a total loss or a vehicles ACV) when the say, 'prior damage' or 'pre-existing damage', is something that would detract from the value, and be noticed and/or pointed out by a prospective buyer of the vehicle (before the wreck that totaled it of course)..As a vehicle ages more and more of this 'prior damage' is ignored and considered 'normal wear and tear'...as an example...a big door ding in a 10 year old car is expected and would not detract from it's value...however, that same door ding on a new vehicle would reduce it's value.. | Quote: | | Does it matter if the wear n tear is ACV reducing, |
ABSOLUTELY, that's the ONLY thing that matters...if (as I said) it's considered 'normal' or 'expected' wear and tear that doesn't reduce the ACV, and would'nt have been even written up on a prior damage sheet /est ...What they mean by wear and tear is ACV reducing (like your torn seat)..
I'm glad you're happy with your new car.... | Quote: | | But carfax was squeeky clean and my mechanic said it was in really good condition. |
Let me warn you about carfax...first of all carfax, can only provide the information that they receive, pay for or steal I had a claim just last week, a 2008 Grand caravan, minor hit to the rear end..the insured had just purchased it two weeks prior...it was not a total loss, but I could tell the entire front end had been worked on and not the best job, and frankly the hair on the back of my neck stood up, so I ran and ISO on it...guess what? It was a prior enterprise car, (ins. knew this), it was also totaled out in July 2009! This the insured did NOT know...I had the displeasure of telling him this, because I thought he should know...I also could tell he had a lein holder on the vehicle and he did NOT have GAP coverage...A salvaged title on a vehicle this age (if it totaled) would reduce the ACV by at least 25%, then he would've been stuck with about 5k left with his lein holder and no car, (again assuming it would total)...To say the least he was upset...and the 'carfax' well it came back perfect! Carfax is NOT the be all and end all that they would want you (the public) to think. I have no idea where the majority of their info comes from but I do know where it DOESN'T come from, and that's insurance companys...and who totals most cars? This of course is not to say that your vehicle isn't clean...just a testiment to what carfax is not....
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Lori
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