When Manny Munoz’s BMW X5 got totaled, he thought his insurance would cover everything. He took out a car loan in 2020 to buy the luxury SUV. Knowing cars lose value fast, he added gap insurance for extra protection.

Gap insurance helps when your car’s market value drops quicker than the loan balance, covering the difference between a totaled vehicle’s insurance payout and what you still owe. While it’s optional coverage on some car loans, a lot of lienholders require drivers to carry gap coverage.

Munoz bought his BMW for $60,517.86. Fast-forward to 2023, after the accident, and his insurance only paid out $26,709. At the time, Munoz still owed a nauseating $45,360 on the loan. This left an $18,651 gap. No problem, though, since his gap insurance should cover it.

Here’s where things went wrong. A 60-cent error in his loan paperwork caused gap insurance claim denial. The credit union originally approved the car loan for $60,517.26, just 60 cents short of the actual price. No one noticed the mistake until Munoz filed the accident claim. Because the numbers didn’t match, the insurance company refused to pay.

Munoz spent seven long months trying to fix the problem. Frustrated, he contacted “On Your Side,” a local news segment. Once the show got involved, his insurance company started processing his claim.

Munoz’s months-long headache shows why gap insurance matters if you finance a car. Cars lose value quickly – many drivers feel shocked at their near-unbelievable depreciation. Without gap insurance, you might end up paying for a totaled car you can’t even drive. 

His ordeal also highlights the importance of checking every detail on your car loan paperwork. Even a small error, like 60 cents, can cause months of headaches. Double-check everything before you sign. It could save you a lot of trouble down the road.