To the best of our knowledge if you have declined GAP insurance the dealer should not be able to add it on to your loan amount or charge you for it in another way. Even though GAP insurance may be helpful to you, if you owe more on the vehicle then its actual cash value and were to be in an accident, you should have the right to turn down this coverage and thus not be charged for it.

In some states car buyers have a Bill of Rights that explain these consumer rights. California has a new Car Buyer’s Bill of Rights that took effect in July 2006.

As part of this bill of rights there is a prohibition on what is termed as loan packing. This is when a car dealer would try to place add-on items onto a loan. These are commonly items that dealers say are free or add little to the monthly payment.

The CA bill of rights also requires disclosure of the price of items commonly packed into loans, such as theft etching on windows and other car parts, GAP insurance, or extended service contracts. Dealers now must provide an itemized price list for all these items, such as warranties and insurance, etc., if the items are being financed.

If you do not wish to have GAP insurance coverage it appears that the dealer has charged you with discuss the matter first with the dealership. If you have problems getting it removed try contacting a state agency's consumer division. The office of the insurance regulator may be able to help.