AmeriCredit review: Write off should have been covered by gap insurance

My wife purchased a 2020 Malibu new and purchased gap insurance. She was in an accident in 2022 and insurance company totalled it due to airbag deployment. Purchased new car and was told gap would kick in the balance. Fast forward to Jan 2026, we received a 1099c for the balance owed that should have been taken care of by gap insurance. I never heard anything from the new car dealer when she purchased in 2022 about gap not paying, so they must have now amercredit writes off and she will pay income taxes on it.