Falling into the gap (insurance) a consumer lesson

Anyone familiar with buying a new automobile knows about Gap insurance—a product that dealerships try to force on you during the sales pitch. When I purchased my last car, the dealership employee said, “I would never allow a relative or a friend to walk out of here without purchasing Gap insurance.” After listening to her convincing sales performance, I spent $500 for the policy. So what is Gap insurance? Let me explain:

If your new car is totaled, you are still liable for the remaining balance after the insurance settlement. For instance, let’s say your $5,000 vehicle is destroyed in an accident. Thankfully, the other driver has insurance and sends your lending institution a check for what they claim to be the value—$3,000. Although you no longer have the car, you are still on the hook for the remaining $2,000. But if you have Gap insurance, they will cover the remaining balance.

Unfortunately, this isn’t what happened after a careless driver ran a red light and totaled my car. Coincidentally, we both had the same insurance company. The insurance company paid me the $9,000 Blue Book value, which left me still owing a $1,000 balance.

I filed my claim through the gap insurance company to pay the balance. To my dismay, they denied my claim and refused to pay. I contacted the agency about the denial and reminded them that I had paid $500 for my gap policy. The gap insurer said the insurance company should have paid the entire $10,000. They advised me to contact the insurance company and request an additional $1,000 to pay off my balance. 

I called the insurance company and asked for an additional $1,000 to pay off my loan—they denied my request and told me the Gap insurer was liable. I then went back to the Gap insurer. The agency told me to pay the $1,000 back on my own. After three rejections, I was furious.

Finally, I approached the dealership where I bought my car. I left numerous messages for the dealership manager about my situation. After he didn’t return my calls, I went to the dealership to speak to him. On the day I went to discuss my problem he was out for the day. Frustrated, I explained my situation to the dealership’s cashier and told her that no one would help me. She suggested I contact our local news channel’s consumer assistance number.

Within days of contacting a local news consumer advocate, I received a call from them offering assistance. The news station called and asked me to conduct a camera interview. I told the consumer advocate that I had been going through this issue for nearly six months.

After my interview, I received a message from the news station. The advocate said I could expect my loan to be paid in full within a week. The reporter had threatened to go on the air with my story and bring the dealership bad press if they didn’t help me. Within a week, my loan was paid in full and I eventually got a new car. Sometimes the squeaky wheel does get the grease.