Indiana GAP Refund: Your Rights Under IC 24-4.5
Last reviewed: August 2026
Quick answer: Indiana is not a GAP Waiver Act state. GAP is a permitted "additional charge" under the Indiana Uniform Consumer Credit Code — IC 24-4.5-2-202 for dealer credit sales and IC 24-4.5-3-202 for bank, credit union, and finance company loans — administered by the Department of Financial Institutions, not the Department of Insurance. When your loan is prepaid in full, coverage terminates and the refund is owed automatically, on a no-less-than-pro-rata basis, with no cancellation fee and no request deadline.
Indiana refunds are automatic on payoff — and there is no 90-day deadline.
IC 24-4.5-2-202(4)(g) and IC 24-4.5-3-202(3)(g) are explicit: upon prepayment in full the GAP coverage "is automatically terminated" and the seller "must issue a refund." You do not have to ask, and no statute of any kind gives you a filing window to miss. If a provider tells you that you were required to request the refund within 90 days, that is another state's rule, not Indiana's.
New to GAP refunds? Learn how a gap insurance refund works, and see how long does a gap insurance refund take in your state.
The statute
Indiana never adopted the NCOIL model GAP Waiver Act. Instead, GAP is a statutorily permitted "additional charge" in consumer credit. Before July 1, 2018, DFI pre-approved GAP administrator forms; HEA 1397 (Public Law 69, effective July 1, 2018) ended form pre-approval and moved every requirement into the two sections above. Chapter 2 governs dealer retail installment financing. Chapter 3 governs loans from banks, credit unions, and finance companies. The two versions are materially identical, and IC 24-4.5-6-201 reaches "a person, including a depository institution," so a bank or credit union is covered the same as a dealer.
Not required, and disclosed as such — GAP "may not be required by the seller, and that fact must be disclosed in writing."
Affirmative request — you must sign or initial a written request for coverage after receiving all disclosures.
Minimum 30-day free look — subdivision (e)(viii); Chapter 3 calls it a 30-day trial period.
$500 minimum deductible coverage provision and an 80% financing floor — (e)(vii) and (e)(ix).
Cancellation instructions — required in the agreement whenever the charge exceeds $400, (e)(x).
Insured obligations — the creditor must insure its GAP obligations under a contractual liability policy from an Indiana-authorized insurer, and keep records of agreements sold, refunded, and expired.
Reasonableness gate — an additional charge must be "of value to the consumer" and "reasonable in relation to the benefits," and DFI decides.
How the refund actually works
Payoff in full: automatic termination, automatic refund
"Upon prepayment in full of the consumer credit sale: (i) the GAP coverage is automatically terminated; and (ii) the seller of the GAP agreement must issue a refund in accordance with subdivision (f)." A cash payoff, a refinance that pays off the old loan, and a sale or trade-in payoff all qualify. This is one of the strongest consumer provisions in any state's GAP law.
Pro rata is the floor, not the ceiling
Subdivision (f)(i): the refund "must be calculated using a method that is no less favorable to the consumer than a refund calculated on a pro rata basis." If your contract's own method pays more, you get the better number. DFI's April 2, 2018 guidance bans the Rule of 78ths for GAP over $400 on agreements consummated after June 30, 2018.
No cancellation fee
Because the refund must be at least pro rata, DFI states plainly that for refundable GAP over $400 "cancellation fees remain prohibited." A $50 or $75 administrative deduction on an Indiana refund is a shortfall you can demand back, and an "excess charge" for penalty purposes.
Mid-term cancellation, if you are keeping the loan
For GAP over $400 you are "entitled to cancel the agreement and obtain a refund of the unearned GAP charge before prepayment in full," and the agreement must contain specific instructions for doing it. Unlike the payoff refund, this one you have to invoke — send a written cancellation request.
"Timely," but no day count
Indiana imposes no numeric payment deadline. Subdivision (f)(iii) requires only a "timely refund" from the seller or its assignee. Practically, set your own reasonable deadline in the demand — 30 days is standard — and cite the IC 24-4.5-5-202(4) penalty for refusing after demand.
Total loss where GAP already paid
A refund is of the unearned charge. If the waiver already paid a total-loss benefit on your vehicle, the coverage was used and there is generally nothing unearned left to return.
The $400 hinge
Indiana's refund machinery is written around GAP that "exceeds four hundred dollars ($400)." Per DFI, GAP sold as non-refundable is capped at $400, and any GAP over $400 must be refundable — pro-rata floor, no cancellation fee, mid-term cancellation right, automatic refund on payoff. Because nearly all financed auto GAP is priced well above $400, nearly all of it is fully refundable. The exception is real, though: a genuinely inexpensive product at $400 or less may lawfully have been sold non-refundable, and in that case you may be owed nothing. Check the GAP charge line on your retail installment contract or addendum first.
Refund trigger events
- Early payoff / prepayment
- Refinance
- Sale or trade-in
- Voluntary cancellation (over $400)
- Free look (first 30 days)
The automatic trigger is "prepayment in full" of the credit sale or loan. Keeping the loan and simply dropping the coverage runs through the separate cancellation right instead, which you have to exercise. Note also that the GAP additional-charge sections live only in Chapter 2 (sales) and Chapter 3 (loans) — true consumer leases are not within them.
How Indiana compares
Indiana is stronger than most states on the trigger and the math, and weaker only on the clock:
| State | Refund method | Fee cap | Provider deadline |
|---|---|---|---|
| Indiana | Pro rata floor, automatic (no request) | No fee permitted | "Timely" — no day count |
| New Jersey | Pro rata, automatic (no request) | $50 | 60 days |
| Michigan | Whatever the waiver discloses | Not addressed by statute | None (90-day request required) |
One more Indiana-specific caution: the private-action window under IC 24-4.5-5-202 generally runs one year after the last scheduled payment (two years for revolving accounts). Send your demand promptly even though no request deadline applies to the refund itself.
Lines to cite in your demand letter
Pick the Chapter 2 cite if a dealership financed the vehicle, or Chapter 3 if a bank, credit union, or finance company made the loan directly.
IC 24-4.5-2-202(4)(g) / -3-202(3)(g)
"Upon prepayment in full of the consumer credit sale [consumer loan]: (i) the GAP coverage is automatically terminated; and (ii) the seller of the GAP agreement must issue a refund in accordance with subdivision (f)."
Subdivision (f)(i)
A refund "must be calculated using a method that is no less favorable to the consumer than a refund calculated on a pro rata basis."
Subdivision (f)(iii)
"The seller of the GAP agreement, or the seller's assignee, is responsible for making a timely refund to the consumer of unearned GAP agreement charges."
Subdivision (f) opening
"If the charge for the GAP agreement exceeds four hundred dollars ($400), the consumer is entitled to cancel the agreement and obtain a refund of the unearned GAP charge before prepayment in full."
IC 24-4.5-2-202(4)(e)(viii)
The agreement must include "[a] provision providing for a minimum thirty (30) day free-look period" (Chapter 3 phrases it as a 30-day trial period).
DFI Guidance, April 2, 2018
"[A] Rule of 78ths refund method is not permissible for agreements consummated after June 30, 2018" — and because refunds must be at least pro rata, "cancellation fees remain prohibited."
IC 24-4.5-5-202(4)
A penalty up to "the greater of either the amount of the credit service or loan finance charge or ten (10) times the amount of the excess charge" — recoverable even after a late refund where the violation was deliberate or reckless.
IC 24-4.5-5-202(8)
"[T]he court may award reasonable attorney's fees incurred by the debtor."
IC 24-4.5-5-202(9)
"The department may act on behalf of a debtor to enforce the debtor's rights under this section against a creditor who is licensed or registered with the department."
If your refund is denied or ignored
File with DFI
The regulator is the Indiana Department of Financial Institutions, Consumer Credit Division, 30 South Meridian Street, Suite 300, Indianapolis, IN 46204. File at in.gov/dfi/file-a-complaint, email DFIcomplaints@dfi.in.gov, or call 800-382-4880 (317-232-3955). DFI's April 2018 guidance warns that GAP not strictly complying with these sections is "treated during examinations as impermissible additional charges with full refunds due to consumers," and that it "will continue to review refunds as part of its examination process." Under IC 24-4.5-5-202(9), DFI may act on your behalf against a creditor it licenses or registers.
Your own claim, and other routes
Indiana gives you a private right of action. Under IC 24-4.5-5-202(3) you are "not obligated to pay a charge in excess of that allowed by this Article," and you may recover the excess "from the person who made the excess charge or from an assignee." Subsection (4) adds a penalty up to the greater of the finance charge or ten times the excess charge where a refund is refused within a reasonable time after demand — recoverable even if the creditor later pays, where the violation was deliberate or in reckless disregard of the Article — and subsection (8) allows attorney's fees. Route a national bank to the OCC, a federal credit union to the NCUA, deceptive dealer practices to the Indiana Attorney General's Consumer Protection Division, and any lender to the CFPB at consumerfinance.gov/complaint.
And if we prepared and submitted your claim, our Service-Fee Refund Guarantee applies: a formal denial or no response after our full follow-up process means your $79 comes back.
Contracts before July 1, 2018
GAP sold before the HEA 1397 rewrite was governed by the older additional-charge regime with DFI form pre-approval, so the refund terms of your specific approved form matter more, alongside ordinary contract law and Indiana's deception statutes. Indiana borrowers have also been swept into the national GAP refund reckoning: Indiana was in both the nationwide class and the statutory subclass in Herrera v. Wells Fargo Bank, N.A. (C.D. Cal., final approval Nov. 16, 2021), where statutory-subclass members received their full early-payoff GAP refund with no deduction for cancellation fees plus interest, and Indiana was one of the twelve statutory-class states in Martin v. Toyota Motor Credit Corp. (C.D. Cal., $59 million, final approval November 2022), where those members were paid automatically with no claim form. Toyota Motor Credit also agreed prospectively to provide GAP refunds automatically after an early payoff, and a separate CFPB order in November 2023 required it to pay $60 million, including roughly $32 million to consumers who never received refunds of unearned GAP and related premiums. Those outcomes landed on assignee lenders, not only the dealers who sold the product.
Frequently asked questions
Is an Indiana GAP refund automatic after early payoff?
Yes. IC 24-4.5-2-202(4)(g) for credit sales and IC 24-4.5-3-202(3)(g) for consumer loans both state that upon prepayment in full, the GAP coverage is automatically terminated and the seller of the GAP agreement must issue a refund. No consumer request is required, and Indiana law sets no filing deadline. A payoff by cash, by refinance, or out of a sale or trade-in all count as prepayment in full. A voluntary mid-term cancellation while you keep the loan is different: for GAP costing over $400 you have an express right to cancel and obtain a refund of the unearned charge, but you have to invoke it.
Is there a 90-day deadline to request an Indiana GAP refund?
No. There is no 90-day deadline, and no consumer request deadline of any length, anywhere in Indiana GAP law. That 90-day rule belongs to states that adopted the NCOIL GAP Waiver Act, such as Florida, Washington, and Michigan. Indiana instead regulates GAP through the Uniform Consumer Credit Code and places the duty on the creditor, not a filing burden on you. Do act promptly anyway: the private right of action under IC 24-4.5-5-202 generally runs one year after the last scheduled payment.
How is an Indiana GAP refund calculated, and can they charge a cancellation fee?
The refund must be calculated using a method that is no less favorable to the consumer than a refund calculated on a pro rata basis. The Department of Financial Institutions guidance of April 2, 2018 goes further: a Rule of 78ths refund method is not permissible for agreements consummated after June 30, 2018, and because the refund must be at least pro rata, cancellation fees remain prohibited. So a fee deducted from your Indiana GAP refund is not lawful on a refundable agreement.
Why does $400 matter for Indiana GAP refunds?
It is the hinge in the statute. GAP sold as non-refundable is capped at $400. Any GAP charge over $400 must be refundable, must use a method no less favorable than pro rata, and carries both the mid-term cancellation right and the automatic refund on payoff. Virtually all financed auto GAP costs more than $400 and is therefore fully refundable. A genuinely cheap product at $400 or less may lawfully have been sold non-refundable, in which case you may be owed nothing.
My bank says the dealer owes the refund. Who is actually responsible?
Both can be. The statute says the seller of the GAP agreement, or the seller's assignee, is responsible for making a timely refund to the consumer of unearned GAP agreement charges. The assignee is the bank or finance company that took your contract, so it cannot deflect the duty back to the dealership. Indiana law covers GAP sold by dealers under Chapter 2 and by banks, credit unions, and finance companies under Chapter 3.
How long does the provider have to pay an Indiana GAP refund?
Indiana sets no fixed number of days. The only standard in the statute is that the seller or its assignee make a timely refund. That is Indiana's main weak spot compared with New Jersey or California, which both impose 60-day deadlines. The counterweight is IC 24-4.5-5-202(4): if you demand a refund and the party liable refuses within a reasonable time, a court may award a penalty up to the greater of the finance charge or ten times the excess charge, plus attorney's fees under subsection (8).
Where do I file an Indiana GAP refund complaint?
With the Indiana Department of Financial Institutions, Consumer Credit Division, at in.gov/dfi/file-a-complaint or DFIcomplaints@dfi.in.gov, phone 800-382-4880. DFI administers the Uniform Consumer Credit Code and can require refunds of impermissible charges, and under IC 24-4.5-5-202(9) it may act on a debtor's behalf against a creditor it licenses or registers. If your lender is a national bank go to the OCC, a federal credit union to the NCUA, and deceptive sales practices to the Indiana Attorney General's Consumer Protection Division.
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Important Notice
This page is general information about Indiana law, not legal advice. GapInsuranceRefunds.com is a document-preparation and claim-assistance service, not a law firm. Refund amounts depend on your GAP charge, your dates, and your individual circumstances. Primary authority: Indiana Uniform Consumer Credit Code, IC 24-4.5-2-202 and IC 24-4.5-3-202 (as rewritten by HEA 1397 / P.L. 69, eff. July 1, 2018), and the DFI "GAP and Debt Cancellation Guidance" dated April 2, 2018. Statutory text here is quoted from unofficial reproductions — verify the current official text before quoting it in a filing.
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