Gap insurance, is it for you? Here's how it saved a driver thousands after her car was totaled
NEWBURGH, Orange County (WABC) -- If you've bought a new car chances are the dealership may have given you the hard sell on something called gap insurance.
If you've financed the purchase, and your car is stolen or totaled, gapinsurance pays you the difference between what your auto insurer pays and what you still owe on the financing deal.
Doreen Brown's car got crushed by the liftgate of an 18-wheeler while it was parked outside of her job close to her Newburgh home.
"I was screaming, I was screaming," Brown said. "It tore the whole door he tried to back up he just kept pushing and totaled it. I was beside myself."
Her Nissan Murano was only eight months old, luckily she was prepared.
"I have insurance full insurance and gap on top of that," Brown said.
Brown is talking about gap insurance.
It's different than normal auto insurance and is typically sold by dealerships for a few hundred dollars and is geared toward buyers who are financing their purchase.
Gap kicks in if your car is stolen or totaled and if you owe more on your financing deal than what your insurance company pays out for your settlement.
Gap insurance cuts a check for the difference so you don't have to pay out of pocket.
"God forbid something happens to your vehicle and it's totaled, like in my case, the insurance only picks up a certain amount. Gap picks up the rest,that's why you pay extra for that," Brown said.
For Brown, the difference between what was left on her financing and what her insurer paid was $5,945.33.
So she put in a claim through her dealer, but that was a year ago.
"I'm calling the dealership, 'it's being taken care of, it's being taken careof.' Nothing," said Doreen. "Nissan never paid gap so gap is coming after me and my husband and we were getting calls every single day."
Around Christmas, they were sent to collections and their credit score was sinking, so Doreen doubled down and reached out to 7 On Your Side.
"'If this doesn't get paid tomorrow I'm calling 7 On Your Side,'" Brown said.
So we got in touch with the general manager and the very next day a check was sent via FedEx.
Her gap insurance paid the difference in full, $5,945.33.
The dealer said the insurance paperwork got lost, apologized for the oversight, and wrote a letter to the credit reporting companies.
"Thank you guys, I love you. I will continue watching and without you, it would have never happened," Brown said.
The big takeaway, you sign a lot of paperwork when you purchase a vehicle, make sure you always get a copy of the contract.
It's also a good idea to call the company independently to make sure it's active and that you are covered.
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