Does Wells Fargo Offer GAP Insurance?

Consumers who purchased GAP coverage from Wells Fargo now say the bank refuses to refund GAP insurance to borrowers who pay their auto loans off early.

What is GAP Insurance?

GAP insurance, or guaranteed asset protection insurance, is a special type of car insurance often sold to consumers when they purchase a new vehicle. This type of car insurance is intended to protect the lender against the loss of value sustained by the car the moment it is driven off of the lot.

While regular car insurance generally only covers the current market value of the vehicle, GAP insurance helps to offset that loss in value for the lender according to Business Insider. Additionally, GAP insurance, like home mortgage insurance, protects lenders in the event that a borrower loses their job and is unable to pay off their loan.

While GAP insurance is not mandatory for car owners, it is often pushed heavily by car dealers and recommended by lenders. The insurance generally costs between $400 to $600, and when borrowers pay off their loans before the due date, they are entitled to a partial refund of this cost because the insurance coverage they have paid for is no longer in use.

Several states have laws requiring lenders to refund the cost of this unused insurance, including Alabama, Colorado, Indiana, Iowa, Maryland, Massachusetts, Oklahoma, Oregon and South Carolina. Every state has laws requiring that the cost of the unused insurance at least be credited towards the account of the borrower, reducing their overall amount owed.

Does Wells Fargo Offer GAP Insurance?

While Wells Fargo does offer GAP insurance, consumers claim that the bank intentionally withholds reimbursement of funds to customers who purchase the insurance policy.

According to a report by the New York Times from late 2017, Wells Fargo has even been under scrutiny from financial regulators due to the massive bank’s alleged policy of not refunding insurance money to people who paid off their car loans before the due date.

Who is Affected?

The article by the Times claims that approximately 800,000 customers may have been affected by Wells Fargo’s alleged refusal to refund auto insurance when the auto loan was paid off early. Approximately 274,000 customers may have been pushed into delinquency on their loans as a result of this practice, and 25,000 cars may have been wrongly repossessed.

Consumers who held auto loans through Wells Fargo with GAP insurance protection and were not refunded for part of their insurance costs after paying off their loan early may be eligible to join a class action lawsuit and pursue reimbursement and compensation for these costs.

Wells Fargo has also been under scrutiny as they may have to pay $394 million to settle claims of adding extra and unnecessary auto insurance on to consumers’ bills to boost their bottom line.

If you held an auto loan through Wells Fargo and terminated your loan early by paying it off, refinancing, or trading or selling the vehicle, you may qualify to join an investigation or class action lawsuit into whether you are owed a refund on your insurance. Customers who terminated their loans early due to total loss claims or repossession are not eligible to join this investigation.

Join a Free Wells Fargo GAP Insurance Class Action Lawsuit Investigation

If you had an auto loan through Wells Fargo and you paid your loan off early or traded it in or sold your vehicle before your loan’s full term, you may be entitled to compensation.

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