POLICY & PROCEDURES FOR: GAP Claims Process. Effective Date of Policy: 07/01/03

Transcription

1 POLICY & PROCEDURES FOR: GAP Claims Process Effective Date of Policy: 07/01/03

2 Table of Contents GAP CLAIMS PROCESSING... 2 CLAIM PROCESS STEP ONE... 2 Supporting Document Listing...2 CLAIM PROCESS STEP TWO... 3 Supporting Documents Are Received...3 Procedure When Claims Have Not Been Completely Documented in 90 Days...3 Procedure When Final Supporting Documents Have Been Received...3 CLAIMS PROCESS STEP THREE... 3 Perform the Overfinancing Calculation...4 Perform ACV Settlement Calculation...4 Checking Adjuster s Report and Settlement Worksheet...4 Run T-Values Amortization Schedule and Compare Results to Pay History...5 Perform Calculation to Determine Payoff as of Date of Loss...5 Checking for Further Deductions...5 Checking for Refundable Items...5 CLAIMS PROCESS STEP FOUR... 6 CLAIMS PROCESS STEP FIVE... 6

3 Policy & Procedures: GAP CLAIMS PROCESSING Department: Claims Revision Date: 04/27/18 Author: J. Hammar Approval: CLAIM PROCESS STEP ONE A GAP claim may be started in one of three ways: 1. A telephone call from a customer, dealer, or lienholder. 2. A claim is filed via the web site ( 3. Claim documents are received via fax, mail, or overnight delivery. Once a claim is started, the customer and the dealer are sent a list of the required supporting documentation. Supporting Document Listing A copy of the GAP waiver (front and back) A copy of the police report (and a copy of the recovery report if the vehicle was stolen and recovered) A copy of the declarations page from the customer s insurance (the page that shows deductibles) A copy of the insurance settlement check Proof of loss statement from the insurance company and a complete adjuster s report (Note: the adjuster s report needs to include a breakdown of the insurance settlement amount. If it does not, a breakdown from the insurance company is required). From the lienholder, a payoff as of the date of loss Also from the lienholder, a payment history A signed copy of the finance contract If the customer purchased any other add-ons (service contract, credit life, credit disability, etc.), proof of refund to the lienholder of these amounts from the dealership. This can be a copy of the check, or a statement on the dealership s letterhead of the amounts to be refunded. A copy of the buyer s order. A copy of the dealer invoice if a new vehicle or a book out sheet if used vehicle. 2 of 6

4 If this is a GAP II claim, we also need a copy of the replacement vehicle finance contract and/or the temporary vehicle registration for the new vehicle. CLAIM PROCESS STEP TWO In an active claim supporting claims documents begin to arrive. Supporting Documents Are Received Claim status is reviewed monthly (or more often). As documents come in, an additional checklist is sent to the customer and dealer to let them know what is still missing. At the end of 60 days, a third and final letter is sent to the dealer and customer once again to let them know what documents are still required to complete the claim. Procedure When Claims Have Not Been Completely Documented in 90 Days Claim is given a final review to be certain that all documents are not received and then the claim is closed incomplete. An exception to this is when claim notes indicate that either a customer, dealer or lienholder is still actively working a claim. Procedure When Final Supporting Documents Have Been Received Once it is determined that the final documents have been received, the address to mail the payment (as well as the customer s account number) is verified with the lienholder. The claim is then moved along to be processed. CLAIMS PROCESS STEP THREE The claim is checked to be sure that all supporting documentation is present, complete and legible. The processing procedure is then begun. 3 of 6

5 Perform the Overfinancing Calculation Established retail guide (i.e., NADA or Kelley Blue Book) value as of the date of purchase (using all options listed in the adjuster s report, dealer invoice, book out sheet) is run. The calculation then is as follows: Retail Guide Value X 150% = Total amount eligible for financing (LTV amount found on GAP Waiver) From total amount eligible for financing the amount financed (from the Truth in Lending Box on the Finance Contract) is subtracted. If the result is a positive number, there is no overfinancing deduction. If the result is a negative number, this amount will be deducted from the claim for overfinancing. Perform ACV Settlement Calculation If the GAP contract has greater of language associated with the determination of actual cash value, the following procedure is followed: Established retail guide (i.e., NADA or Kelley Blue Book) value as of the date of loss (using all options listed in the adjuster s report, dealer invoice, book out sheet) is run establishing retail value. The primary insurance deductible amount is deducted from this value and the result is compared to the amount on the insurance settlement check. Whichever amount is greater is used in the GAP calculation as Actual Cash Value as of the date of loss. Note: If retail guide is the amount used, the amount of the primary insurance deductible (up to $1,000) is added in the GAP calculation. This step is omitted if the greater of language is not in the contract. Checking Adjuster s Report and Settlement Worksheet The adjuster s report and settlement worksheet must be examined for the presence of items which can be deducted in the GAP calculation. These include deductions for prior damage, major condition adjustments, towing, storage, salvage, etc. If the insurance settlement is used for Actual Cash Value, these items must be deducted in the GAP calculation. ***Note*** If determined that the primary insurance did not include all options on the dealer invoice or book out sheet, please refer to supplemental insurance recovery process procedures. In addition, if the difference between the primary insurance s actual 4 of 6

6 cash value and the established retail guide is $1,500 or greater, please refer to the supplemental insurance recovery process procedures. Run T-Values Amortization Schedule and Compare Results to Pay History Variables from the finance contract are loaded into the T-Values amortization schedule. The amortization is run to determine how many payments were due by the date of loss and what the balance would be assuming all payments were made on time. The pay history is then examined and payments are counted. If any complete or partial payments were missed, the amount not paid is deducted from the GAP calculation. The balance on the amortization schedule is compared to the payoff as of date of loss (performed in the next step) to determine the reasonableness of the computed payoff. Perform Calculation to Determine Payoff as of Date of Loss From the payment history, the balance that is present after the last payment prior to the date of loss is the beginning point. This amount is multiplied times the interest rate noted on the finance contract. This gives annual interest, so the amount must be divided by 365 to get the daily interest amount. The daily interest amount is then taken times the number of days between the last payment and the date of loss. This amount is then added on to the balance as of the last payment and the sum is then compared to the amortized total from T-Values. The totals should be within less than $100. If they are not, closer examination of the pay history is performed to check for more deductions. If the amount computed as the payoff as of date of loss is within $100, that amount can be used in the GAP calculation. Checking for Further Deductions The pay history must be examined for items which must be deducted in the GAP calculation. These items include the above mentioned missed payments, late fees, extension fees, loan fees, forced place insurance, etc. All of these will be deductions in the GAP calculation. Checking for Refundable Items The finance contract and buyer s order are examined to determine if the customer purchased items which can be refunded such as a service contract, credit life insurance, 5 of 6

7 credit disability insurance, other warranties, etc. If these items are present, there must be proof from the dealer in the form of a copy of a check or an official statement from the dealer of the amounts refunded to the lienholder. These amounts are deductions from the GAP calculation. CLAIMS PROCESS STEP FOUR At this point, all line items used in the GAP calculation have been determined. The calculation takes the payoff as of date of loss, subtracts the amount overfinanced (if any), subtracts late payments, subtracts any other unapproved items noted on the pay history, subtracts the amounts of refundable items, subtracts items noted from the adjuster s report, and finally subtracts actual cash value. As noted above, if retail guide value becomes actual cash value, the deductible (up to $1,000) is added. The sum of these items is the amount to be paid to the lienholder. In the event that the number is negative, it means that there is no deficiency balance and a NO GAP letter is sent to the customer (showing the calculation). The claim then moves to a quality control process where the claim is once again checked for completeness and all above noted calculations are checked. CLAIMS PROCESS STEP FIVE If the amount of the claim is below $12,500, the drafts are printed and a check register is forwarded to the underwriter. The drafts are then mailed. If the claim is $12,500 or greater, once a week copies of these claims are forwarded to the underwriter for final approval and the underwriter reviews claims and gives approval to issue drafts. 6 of 6