Gap Insurance Refund in Tennessee

Summary: Tennessee drivers may qualify for a prorated gap insurance refund if they pay off their loan early, switch insurers, sell, trade, or refinance their vehicle. Refund amounts depend on the policy cost, term length, and remaining coverage time. To cancel, contact your provider with the required forms and proof of sale, loan payoff, or refinancing. Dealership refunds need a purchase agreement and updated contact details. While gap insurance refunds aren’t issued after a total loss claim, partial refunds may apply after voluntary repossession. Review your policy’s terms for potential fees and reduced refund amounts to avoid confusion and frustration. Estimated Read Time: 6 mins
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Tennessee drivers tend to keep their vehicles longer than the national average by more than a year, making gap insurance refunds a valuable consideration. If you’ve paid off your car loan or sold your vehicle, you may be eligible for a refund on unused gap insurance. However, how you cancel your policy is important and can affect your finances and production. Learn how to navigate the process and maximize your refund below.
What Is a Gap Insurance Refund in Tennessee?
In Tennessee, gap insurance refunds are available if you cancel your policy before using the full premium—this typically happens when drivers sell, trade, or pay off their vehicles early.
Refund amounts depend on factors such as the vehicle’s value, loan balance, mileage, and loan term. Each insurer’s refund policy varies, so it’s essential to check with your provider for specifics.
Gap waivers linked to auto loans may be refundable or non-refundable after the "free look" period.
If canceled within this period and no claims are made, a full refund is usually granted. Afterward, a prorated refund may apply based on unused coverage.
To request a refund, submit a written cancellation notice to your insurer or lender within 90 days of the loan’s payoff or policy cancellation.
Keep in mind that in cases of cancellations involving a default or vehicle repossession, refunds might not be returned to you as the policyholder and are instead used to pay the remaining loan balance still outstanding.
Everyone’s policy is different and it’s important to review the terms and conditions of your coverage to understand which scenarios apply to you.
Can You Get a Refund on Unused Gap Insurance in Tennessee?
If you live in the Volunteer State and pay off your car loan early, sell, or trade your vehicle, you may be eligible for a prorated refund on unused gap insurance.
Cancellations made within 30 days of purchasing the policy typically qualify for a full refund.
After that period, refunds are prorated based on the remaining coverage months, however, it depends on your coverage because not every policy allows for one.
To request a gap insurance refund, submit proof like a loan payoff notice or sale confirmation.
Contact your insurer to confirm the process and provide the required documents. This helps determine eligibility and reclaim any unused coverage efficiently.
How to Get a Gap Insurance Refund in Tennessee
If you need a refund on your gap insurance, the first thing you need to understand is who provides you with coverage.
There are many different ways to receive gap insurance protection and these factor into how you will go about receiving a refund.
Furthermore, the reason you’re getting a refund will also be a factor in addition to other variables.
Take a closer look at many common ways drivers in Tennesse can receive reimbursement:
Dealerships
To request a gap insurance refund through your dealership, locate your vehicle purchase agreement or request a copy.
Contact the insurance provider listed to learn about the cancellation process, which may involve submitting a written notice.
Ensure your address is current to receive your refund check promptly, otherwise, the process may be unnecessarily dragged out.
If you need continued coverage, secure a new policy before canceling to avoid lapses in coverage.
Totaled Vehicle
Drivers in Tennessee may qualify for a refund on gap coverage if their vehicle is totaled but they don’t file a claim with their auto insurance carrier.
When you don’t file a claim, your premiums may be eligible depending on your policy’s terms and conditions, as they weren’t used toward covering you as a policyholder. Contact your insurer to understand your specific policy’s terms.
After Paying Off Your Loan
You won’t receive everything back, however, paying off your car loan early may make you eligible for a partial gap insurance refund.
Since you’ve already used part of the coverage, the refund will be prorated based on the unused portion of the policy.
To receive the refund, contact your provider, which could be your insurance company, dealership, or lender.
Voluntary Repo
Drivers opting for voluntary repossession may reduce credit damage and repossession costs.
If you prepaid for your gap insurance, you might qualify for a prorated refund since coverage ends when the loan closes.
Contact your insurance provider to review cancellation terms and check refund eligibility.
After Selling or Trading
If you complete a transaction involving your vehicle, including selling, trading, or paying it off, you might be eligible for a refund on unused gap insurance.
For example, canceling a one-year policy after two months could refund the remaining ten months.
Be sure to provide a loan payoff notice if needed, and wait until the car is officially sold or traded before canceling your policy to avoid coverage gaps.
Refinancing Your Auto Loan
Paying off your vehicle faster is always ideal and through refinancing, you may be able to find lower interest rates through shorter loan terms making this possible.
In doing so, gap insurance may no longer be necessary and a refund could be provided for your unused premiums. Always contact your insurer to understand whether or not your policy qualifies.
How to Cancel Gap Insurance in Tennessee
Canceling gap insurance is simple if you follow a few steps:
- First, contact your insurer to request cancellation and check refund eligibility.
- Be sure to provide key details like your name, address, and Vehicle Identification Number (VIN), either online or through a formal letter.
- If canceling online, request an email confirmation with refund details.
- Keep a copy of your written request for reference and save important documents like policy numbers and receipts.
- Verify that your refund reflects unused coverage minus applicable fees and ensure your contact information is current to avoid processing delays.
Note: Before canceling, secure new coverage to prevent protection gaps.
How to Calculate Gap Insurance Refund in Tennessee
You can calculate your potential gap insurance refund, you simply divide the total cost of your policy by the number of months it covers.
Once you have this figure, otherwise known as your cost per month, multiply it by the number of months remaining on your policy.
For example, if you purchase a gap policy that costs $800 and covers 24 months, your cost per month would be $33.33. If you cancel your policy after 10 months, you will have 14 months remaining on your policy. Therefore, your estimated refund would be around $466.67 (14 months x $33.33).
Keep in mind there are still fees for canceling your policy and other terms pertaining to your car loan that may reduce how much of a gap insurance refund you receive.
Full refunds still may be available depending on the terms of your loan, if you cancel your policy within the first 30 days.

Need a Gap Insurance Refund? Compare Quotes in Tennessee
When canceling your coverage for a gap insurance refund, be sure to have a new policy in place when appropriate.
Every time you change your car insurance in Tennessee, it’s important to review your coverage to avoid paying too much and enrolling in inadequate protection.
Compare top-rated carriers with our auto insurance tool below or ask an agent to find personalized coverage and save: