GAP insurance is a debt cancellation service that Toyota provides to customers who lease or finance an automobile through Toyota Motor Credit Corporation. Under this service, Toyota agrees to cancel the remaining lease or loan balance when the customer’s automobile is totaled (damaged beyond repair or stolen and never recovered) and the insurance payout does not cover the outstanding balance on the lease or loan. In other words, Toyota agrees to forgive any “gap” between the amount the insurance company pays out and the amount outstanding on the lease or loan.
Because the GAP insurance fees are prepaid upfront for the entire term of the underlying lease or loan, if the underlying lease or loan is paid off or otherwise terminated early, or if the customer cancels the GAP insurance before the end of the lease or loan term, then Toyota is contractually and legally required to refund the unused and unearned portion of the GAP insurance fees on a pro-rata basis.
You may have a claim against Toyota if you purchased GAP insurance on a lease or loan financed through Toyota and believe Toyota has not refunded fees for the unused portion of that GAP insurance. CONTACT FDAZAR IMMEDIATELY.
Recently, Toyota has aggressively incentivized automobile dealers across the country to put pressure on borrowers to purchase GAP insurance. If a customer signs up for GAP insurance, the customer is required to prepay upfront the GAP insurance fees for the entire term of the underlying lease or loan in one lump sum payment. If the customer cancels the GAP insurance before the end of the lease or loan term, or if the GAP insurance is effectively cancelled because the underlying lease or loan is terminated or the vehicle is repossessed prior to the end of the lease or loan term, Toyota is contractually and legally required to refund the unused and unearned portion of the GAP insurance fees to the customer on a pro-rata basis.
Despite these requirements, Toyota has systematically failed to refund unearned GAP fees when there is an early termination of the underlying lease or loan or repossession of the vehicle. Instead of refunding the unearned GAP insurance fees or at least notifying consumers they are entitled to a refund, Toyota sits back and keeps the funds for itself knowing full well that consumers are usually unaware or forget they are entitled to a refund of the unused portion of their prepaid GAP insurance fees when they have paid off their lease or loan early or had their vehicle repossessed.
Franklin D. Azar & Associates is well known in the class action community. For over 30 years, our attorneys have protected the rights of individuals who have been taken advantage of by big corporations and during that time, has secured over $1.5 billion in compensation – including over $750 million from Walmart in a wage and hour dispute that spanned approximately 26 states. FDAzar has been and is involved in mass tort and class actions against other large corporations like Toyota, Hewlett Packard, British Petroleum, drug manufacturers, medical device manufacturers, and 401k providers. Our class action department is staffed with experienced and knowledgeable attorneys who focus on litigating large, complex cases.