Jesse’s Story of the Day

Jesse exposes differences between gap insurance and gap waiver


A crash totaled a south sound woman’s brand new car.  She wasn’t worried because she purchased what she thought was gap insurance.  But the payout didn’t match up.

“My daughter was at a stoplight,” Stephanie Hackler explained. “She was standstill, rear-ended, and then… the car behind her ran into her and pushed her into another car, so she was kind of sandwiched in between two vehicles.”

Hackler had just purchased a Jeep for her daughter before the accident.

The vehicle was totaled, so there was a gap of $2,800 between what she owed and what the insurance company was going to pay.

But Hackler wasn’t worried because she thought she had gap insurance.

“I was expecting the entire amount,” Hackler said.

The company that had the contract, PR CO out of California, covered just $782 of the $2,800 gap.  Hackler paid $895 for the coverage.

“What’s the point of having gap insurance?” Hackler said.

I took Stephanie’s story to Washington Insurance Commissioner Mike Kreidler, and he didn’t have good news.

“It’s not under my regulatory control,” Kreidler explained. “It’s not an insurance product. I don’t regulate these types of debt products.”

Stephanie had purchased was a gap waiver, not gap insurance.  This gap waiver is a contract to waive some of the loan that exceeds actual value.

Kreidler said a gap waiver generally doesn’t have the same amount of coverage as gap insurance.  He said gap insurance covers the gap between what is owed and market value.

Here are a few things to know:

Only auto insurance companies can sell true gap insurance.

If you buy a gap waiver, try to negotiate a lower price for it.

Finally, make sure you read the fine print of any deal.

Hackler isn’t happy about the outcome of her case, but she hopes others can learn from it.

“I mean, there’s no point in getting it,“ Heckler said.  “I could have just paid the $700 out of my pocket versus buying something in advance that actually took $20 of my money.”

Full statement from PR CO:

“As you know, in response to Ms. Hackler’s complaint, the Washington Department of Insurance determined that we correctly followed the terms of the Waiver and we paid Ms. Hackler the amount owed under Waiver.   Ms. Hackler signed the Waiver confirming she read the entire agreement and understood all terms. Also, the dealer who sold Ms. Hackler the vehicle and the Waiver signed that they explained all terms, conditions, and exclusions to Ms. Hackler and that Ms. Hackler read the agreement.  We understand Ms. Hackler was not satisfied with this result, which is unfortunate.  However, Ms. Hackler was paid according to the terms of the Waiver and therefore, no other result was possible.”

Additional tips from the Washington Insurance Commissioner:

If you buy a car with a loan and it gets totaled, you may owe more than your insurance policy will pay – actual value vs. your loan amount.

The difference can be covered by either gap insurance or a debt waiver. Here’s how they differ:

Gap insurance

Debt waiver

You purchase it from your insurance agent or company It may be offered to you by the auto dealer or your lender
It’s an endorsement to your auto policy It’s NOT insurance

It’s a contract to waive some of the loan that exceeds actual value

It is sold under several names … gap waiver, debt waiver, debt cancellation

It’s typically available on cars that are one year old or less. It’s not available on used cars. It’s commonly offered when buying a used car, but it may be offered by the dealer or lender when buying a new car.
You pay a monthly premium for the term of the endorsement You pay a flat rate, often hundreds of dollars.


  • This is truly a case of buyer beware
  • Debt waivers are often advertised to pay the gap between the car’s purchase price and actual value if it’s totaled. But the fine print may stipulate a maximum amount payable that may not equal the full loan balance.
  • If you decide to buy a debt waiver, you may be able to negotiate a lower price for the waiver.
  • If you are not sure what type of product you are being sold, call us! We can answer your questions and help you decipher the fine print: 800-562-6900 or visit



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