Gap Insurance

carthell

I looked up the company via the California Dept. of Insurance, insurance.ca.gov. (Tip: always use a state insurance regulation web site to get preliminary info about a insurer.) The backing company, Western General, has operated in the state since 1973. Right now, the premiums earned vs. losses (and related expenses) related to underwriting put the company in a $2.6 million hole as of 3/31/13. The company appears to have sold some assets and is using its surplus pool to cover the loss ($20 million after deductions). According to their financial statement, the company's underwriting loss was $6 million for 2012.

They're a small company. If they had $100 million in bonds, I'd feel better about their position. They have about $30 million in bonds, and $5+ million in cash.

So based on the financial documents, they appear to be legitimate. I'd see what A.M. Best says about the company's financial stability. You can get the information for free if you register.

tbenjamin1

I made the mistake of purchasing gap insurance for $895 through toyota (Rav4 Hybrid) on a 36/12k lease... but I have 30 days to cancel it. However, my insurance company doesn't offer GAP and I can't find any stand-alone GAP providers. If I put 3000 down is that enough to be safe without GAP or should I consider sucking it up and keeping it? Thanks!

kyfdx

tbenjamin1 said:

I made the mistake of purchasing gap insurance for $895 through toyota (Rav4 Hybrid) on a 36/12k lease... but I have 30 days to cancel it. However, my insurance company doesn't offer GAP and I can't find any stand-alone GAP providers. If I put 3000 down is that enough to be safe without GAP or should I consider sucking it up and keeping it? Thanks!

Wow.. for $895, I'd rather go without it. Keep that $895 in reserve, in case it's needed for a shortfall.

tbenjamin1

Is there a way to estimate how much I could potentially owe out of pocket if the car is stolen or totaled? Let's say 6 months from now. The MSRP was 31,710, the negotiated price was 29,080, and I put 3000 down. The lease w/o gap is 232/month.

What I'm basically asking is, "Did the 3000 down help to offset enough of the gap?"

Thanks again.

kyfdx

tbenjamin1 said:

Is there a way to estimate how much I could potentially owe out of pocket if the car is stolen or totaled? Let's say 6 months from now. The MSRP was 31,710, the negotiated price was 29,080, and I put 3000 down. The lease w/o gap is 232/month.

What I'm basically asking is, "Did the 3000 down help to offset enough of the gap?"

Thanks again.

That's really hard to say..

But, let's say it's $3000. Would you pay $900 to insure against a $3000 loss?

This is one (of many) reasons that I've never leased a Toyota. Virtually every other captive finance company includes GAP on their leases.