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Is GAP insurance transferable if you sell the car?

Things to remember...

  • GAP insurance is specifically tied to the vehicle you drive
  • GAP auto insurance is not a transferable type of coverage
  • If you sell the car, the only thing typically transferable is a warranty

GAP insurance is a helpful type of coverage to have on your vehicle, and there are many reasons why you should get GAP insurance. It is specifically tied to the vehicle you drive, similar to auto insurance.

But, is gap insurance transferable if I sell the car? Understanding how it works and how it transfers is critical if you choose to sell your car.

Compare quotes from top insurance companies right here to see how much you could save on auto insurance and GAP coverage.

Table of Contents

What’s Transferrable When Selling a Car

You have to look at what is transferable if you decide you want to sell your car. You would be able to transfer the title of your car as well as any warranty that is still in place.

For example, depending upon the make and model you buy, there might be a manufacturer warranty for three years or 30,000 miles.

If you have only had the car for one year and 15,000 miles, the remaining warranty is still valid because it is tied to the car’s VIN and not to you as an individual.

All of these things need to be identified when you choose to sell your car so that the seller knows what they are getting.

GAP insurance policies are great to have on a new vehicle. It adds a significant amount of financial protection in the event you get into an accident. It’s not something that is transferable, however.

Does my gap insurance transfer if I refinance?

Is gap insurance transferable if I refinance? GAP insurance does not transfer if you refinance.

When you refinance, the balance of the original loan is paid off. That means your GAP insurance will end. If you wish to continue having GAP coverage, you’ll need to purchase a new policy.

What is GAP insurance?

You want to do your best in order to protect the investment of a new car or truck. GAP insurance is often suggested by the dealership because it fills the gap between the depreciated value and current market value on your car.

GAP insurance is highly suggested if you buy a new car and you:

  • Rolled over negative equity
  • Made a down payment of less than 20 percent
  • Financed for 60+ months
  • Bought a car that depreciates quickly

When you sit down with the finance department at the dealership, GAP insurance is often suggested. This is something that you can buy directly from the dealership or obtain through an auto insurance company.

However, the Consumer Finance Protection Bureau notes that you should check the terms, as GAP insurance is not always required.

Can I cancel GAP insurance from the dealership on your leased car? It can be more expensive if you purchase GAP insurance through a dealership. Forbes reports that they may charge between $400 and $900 through the dealership, as opposed to about $20 a year with traditional insurance coverage. 

If you want to know how to cancel GAP insurance with your Honda, Ford, or Hyundai, you’re in luck. You usually can cancel if you got GAP coverage from the dealership, and then you may even be able to get a GAP insurance refund. The phone number of your local dealership should still be kept, as your new policy won’t necessarily cancel your old one. You’ll need to call them and make sure everything is cancelled so you can get your refund.

That’s because your GAP coverage might be wrapped up into the loan and paid upfront, in which case you can get the dealership GAP insurance refunded for what was paid ahead-of-time. 

Since you have to purchase auto insurance anyway, it’s often best to try and get the GAP insurance through the auto insurance company. You can also choose to add collision and comprehensive coverage without spending a lot of money.

This video from Allstate talks a little bit about GAP auto insurance.

If you’re leasing, you should definitely look into GAP coverage.

How much is GAP insurance? The Insurance Information Institute (III) estimates that GAP coverage only adds about $20 per year to your existing policy. That’s only $1.67 per month. But it does vary, so it’s best to check around. 

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Why GAP and Auto Insurance Should Be Purchased

It’s important to look at purchasing GAP and auto insurance. Both are important, though only auto insurance is required by the state.

Neither one is going to be transferable if you decide to sell your car because the policies are purchased in your name and are specific to your car. If you choose to sell your car, the person who buys it would need to purchase their own auto insurance.

The GAP insurance would not be transferable because it is only available on new cars and trucks. Since you are selling it, it’s no longer classified as new.

You have to look at protecting your own investments. Auto insurance is something that you need to get in order to stay compliant with state law.

Every state has specific types of insurance that you need to obtain. This requirement includes liability for bodily injury and property damage. Some states will also require you to purchase personal injury protection or medical payments coverage.

It is then up to you as to whether you want to add full coverage auto insurance, which includes collision and comprehensive coverage.

Additionally, most auto insurance companies offer GAP insurance. If you are looking at ensuring a new car, you should look at whether GAP coverage is going to help you. Often, it’s only a few dollars a month to add to the premium.

This low price makes it well worth it in order to protect your investment to the fullest so that the insurance company pays on what you actually go on the car as opposed to the depreciated value.

Without the GAP insurance, your standard insurance policy would only cover the depreciated value. This means you could still end up owing thousands of dollars on the lease or loan of your car.

How do I get my gap insurance back after selling my car?

Can you get a refund on unused gap insurance? If you pay off your loan early or sell the vehicle, you’re entitled to a refund. While some insurers might get a notification of sell and automatically refund it, you should still call your auto insurance company to tell them just in case. 

How much money do you get back from gap insurance? That depends on how much you’ve paid up-front and ahead of time. You should be able to get back the rate payments that you overpaid for.

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Can gap insurance deny my claim?

Gap insurance is designed to work along with traditional auto insurance coverage. There are some reasons gap insurance won’t pay, and the major one is if you don’t have regular auto insurance coverage. They’re supposed to work together, and GAP won’t cover any claim you make if you don’t also have a normal auto insurance policy.

Here are the rates for auto insurance across the nation.

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GAP insurance is only going to add a couple of dollars each month to this. It’s only supposed to cover the gap between how much your traditional auto insurance covers — which is how much the car is worth at the time — and your loan, which is how much your car sold for originally.

Do insurance companies sell GAP coverage? Yes, and you can get free quotes today. Compare auto insurance quotes right here by entering your zip code below. It’s free and easy and could save you hundreds.


  1. https://www.consumerfinance.gov/ask-cfpb/what-is-guaranteed-auto-protection-gap-insurance-en-797/
  2. https://www.forbes.com/advisor/car-insurance/gap-insurance/
  3. https://www.iii.org/article/what-gap-insurance

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