‘They said they are not going to cover everything’: Ontario man owes nearly $7,000 in loan payments despite vehicle getting stolen

GAP insurance can be expensive and as one Ontario driver found out, it doesn't cover everything if your car is written off after an accident or stolen.

An Ontario man whose car was stolen still owes thousands of dollars to pay off the loan on it, despite saying he paid extra for an insurance policy that was supposed cover those costs.

“It was stolen from my home in the middle of the night right out of my driveway,” Sujeesh Puthanveettil, of Mississauga, told CTV News Toronto.

Puthanveettil said it was in March of this year when he bought a 2023 Audi A4. Unfortunately, just three months later in June, the car was stolen.

With financing, Puthanveettil said he paid $53,842 for the car. Included in the price was a three-year maintenance package for $1,299, a six-year extended warranty for $3,299, and Guaranteed Asset Protection (GAP) insurance for $2,996.

In the event a vehicle is totalled or stolen, GAP insurance can pay off the loan if more is owed than what the car is actually worth.

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“They said GAP insurance will cover the negative equity since I financed the car. But when I called them, they said they are not going to cover everything,” Puthanveettil said.

When the car was stolen, Puthanveettil said his insurance company paid $39,152 for the car. GAP insurance paid another $6,378, but there is still an outstanding amount of $6,900 owing.

That’s because GAP insurance doesn’t cover things like warranties and maintenance packages.

“Since I haven’t used any of them and I only used my car for three months, they should refund that (the money paid for the maintenance package and the extended warranty) to me,” he said.

Shari Prymak with Car Help Canada said dealerships may pitch expensive add-ons that may not be worth buying, and also won’t be covered by GAP insurance in the event your car is written off in an accident or stolen.

“Often these products don’t add any value to the vehicle, so if your vehicle is written off but you owe thousands of dollars for all the add-ons, you’re on the hook for that,” said Prymak.

Prymak said if you are pitched GAP insurance, make sure you know exactly what it covers before buying it.

“Not only is GAP insurance often very overpriced, but it’s a product for a problem that should not exist to begin with,” he explained.

“You only run into the issue of having enormous negative equity when you finance a car over a long term. But if you finance a car over a reasonable term such as four years maybe five years at the most, you’ll never run into the issue of negative equity so there will be no reason to have GAP insurance in the first place.”

Puthanveettil said his dealer offered to refund him $600 for the maintenance package and the warranty company offered him $256, however if he accepts both offers, he will still owe more the $6,000 for a car he no longer has.

“I currently don’t have a car and since I owe six grand now, I don’t have any plans to buy one,” said Puthanveettil.