Jesse Jones: Lynnwood couple feeling the heat over gap insurance after car fire

LYNNWOOD, Wash. — A Lynnwood couple was left scrambling after their brand new Honda caught fire in their apartment’s parking garage.

“It’s six in the morning and out of nowhere, my door starts getting beaten down, like there’s a fire,” said Trevon Gipson.

At the time he’d made just one payment on the car. Luckily, he had gap insurance.

Andrew Davis with Washington’s Insurance Commissioner’s Office says gap coverage bridges your loan balance and the value of your vehicle.

“Your collision coverage is only going to pay for the actual cash value of your vehicle,” he said. “There may be some additional out-of-pocket expenses that you end up having to pay because there’s a difference between the amount that you owe on your loan versus what the car is worth.”

Trevon paid $1,000 for coverage from Advanced Protection Products International (APPI). According to the company, his gap was a little more than $4,800 and the lender is expecting that money.

He filed his claim in August and it’s supposed to be handled in 15 to 25 days. He can’t afford another car until that is paid.

But weeks into the case, Trevon says the police report number he was sent was wrong. Since he has only 90 days to file the claim, he immediately refiled and then says he couldn’t get any clear answers from the company.

“Ask for a supervisor, I got transferred to oblivion and I used to work at a call center as a manager,” he said.

Then out of nowhere with just five days to go, APPI sent an email saying he was missing documents. He called because none were listed in the message.

Trevon’s wife Tia was eight and a half months pregnant at the time.

“It’s been a lot of stress,” she described. “You give me a scale of 1 to 10, like nine [or] 10.”

Just for perspective, GEICO was Trevon’s auto coverage. He says GEICO paid their claim within moments.

An estimated $38,700 was paid by GEICO but for the gap insurance the clock was ticking.

“Here am I just expected to be car-less, and does that means jobless and then homeless because my cars were accidentally set on fire?” he posited.

When we called APPI, we were told Trevon was just approved. When we asked about the delays with the claim, they gave us the following statement:

“We experienced unprecedented claim volume, and simultaneously experienced some document processing software issues – that have now been resolved. We have also added staff. We are very sorry for the inconvenience that this has caused Mr. Gipson.”

What consumers need to know is that they should speak to their own insurance company before purchasing a car to know their options.

“We encourage consumers to reach out to their insurance company before going and making an auto purchase to better understand what products are out there, how they work,” said Washington’s Insurance Commissioner’s Office Policy Analyst Andrew Davis.

Trevon is glad the situation is taken care of now. His wife Tia gave birth to little Kam, and now, they have to bridge the gap between sleep and work.

One note. There’s a gap waiver-which you buy from the dealer-like Trevon did. Or there’s gap insurance that you can get from an insurance agent.

The Washington insurance commissioner says gap waivers are often overpriced. And you can’t cancel or return it if you pay down your auto loan quickly and build equity.

However, a gap insurance endorsement, should only raise your premium a bit and you can cancel it when you want.