I Paid Off My Car! Can I Stop My GAP Insurance?

Paying off your car loan is a big milestone — and it often means you can remove certain coverages you no longer need. One of the most common questions after the final payment is:

“Can I cancel my GAP insurance now?”

What GAP Insurance Actually Covers

GAP (Guaranteed Asset Protection) insurance covers the difference between what you owe on your car loan or lease and the car’s actual cash value if it’s totaled or stolen.

• If your car is paid off and you own it outright, there’s no “gap” for the policy to cover.
• That means GAP insurance generally isn’t necessary once the loan balance is $0.

When It’s Safe to Cancel GAP Insurance

You can usually cancel GAP insurance when:

• Your auto loan or lease is fully paid off.
• You’ve received official documentation from your lender showing a $0 balance.
• Your insurer or GAP provider confirms you’re eligible to remove it.

How to Cancel GAP Insurance

1. Verify Payoff — Request a payoff letter or confirmation from your lender.
2. Contact Your GAP Provider — This might be your insurance company, the dealership, or a third-party GAP administrator.
3. Submit Documentation — Provide proof that the loan is fully paid.
4. Request Any Refund — If you prepaid for GAP coverage, you may be entitled to a prorated refund for unused months.

What Happens to My Regular Car Insurance?

Canceling GAP coverage does not cancel your regular car insurance.

• You still need to maintain liability coverage (and possibly collision/comprehensive if required by your state or for your own protection).
• If you keep extended coverage, your insurer may still pay the car’s actual cash value if it’s totaled.

Disclaimer: This article provides general information and is not legal or insurance advice. GAP insurance rules, cancellation policies, and refund eligibility vary by provider, lender, and state. Always confirm with your GAP provider and lender before making changes to your coverage.