Some people elect to purchase gap insurance when financing an automobile. If a vehicle is wrecked and totaled, the amount the insurance company will pay won't always be the amount that is owed on the auto loan. Gap insurance covers the difference between how much you owe on the vehicle and how much it is worth should be totaled. It provides extra coverage for the "gap" that occurs when a vehicle is not worth the amount owed to the finance company. If the vehicle is sold or paid off early, and you paid gap insurance out of pocket, you may be able to collect a refund of the unused premium. Calculating a premium refund is the same as it is for any insurance premium refund.
Instructions
- 1
Locate the gap insurance premium amount on the financing contract.
2Locate the term of the loan. This is the length of time for financing the vehicle (i.e., 60 months).
3Subtract the number of months remaining on the financing contract by the number of months for which the financing was in place. Example: If the vehicle was financed for 60 months but paid in full in 40 months, 20 months is the number.
4Divide the gap-insurance premium by the number of months the vehicle was financed for. This will indicate how much the gap-insurance premium costs per month.
5Multiply the monthly gap-insurance premium by the number of months remaining on the financing contract. This amount will be the unused gap premium available for refund.
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