It is possible to transfer the policy to a new vehicle if you have purchased gap insurance from a car manufacturer or an auto insurance company. However, if you have brought gap insurance from a lender, it may not be transferable.
Gap insurance provides coverage for the difference between the actual cash value of your car and the outstanding balance on your loan or lease in case of total loss or theft.
When gap insurance is not transferable
Gap insurance bought from your lender is linked to your loan or lease, which means that if you refinance your loan, the gap coverage becomes invalid as there’s no loan or lease agreement tied to it.
Not all car insurance companies or manufacturers provide the option to transfer gap coverage. Therefore, it’s a good idea to check with your gap insurance provider to know the terms and conditions.
What happens to the gap insurance when I sell my car
If you decide to sell your car, the gap insurance policy will remain active for the duration of its term, which is usually based on the length of your loan or lease agreement. However, the coverage only applies to the vehicle’s original owner and will no longer be valid for you after the sale. You will need to cancel the policy or inform your insurance company about the change in ownership.
Each insurance company may have guidelines and restrictions regarding the transfer of gap insurance. It’s advisable to contact your insurer directly for accurate and up-to-date information regarding the transfer process.