I was in an accident where I was rear ended and my car was ruled a total loss. How does paying off the remaining balance go. Am I liable? Is the at fault drivers insurance liable? How does it go? I do have gap insurance
Financed car is a total loss but I’m not at fault
byu/Kayvon0731 inInsurance
Posted by Kayvon0731
11 Comments
Your gap should come into play.
The other driver is t responsible for your loan status
Your gap will kick in when the insurance gives you the value of the vehicle. Gap covers the remaining balance on the financing.
Other drivers insurance pays your bank the full market value of the car, then gap insurance pays any leftover balance on the loan
You walk away with money only if the value of the car is more than the loan amount
If you don’t have gap, then you are learning the lesson of always get gap.
If you’re underwater on the loan, and don’t have GAP, you are responsible. If you have GAP, then you’re covered, but likely end up with $0 towards a replacement car
This is why I always buy used with big down payment.
At fault or not, it doesn’t matter when it comes to a total loss other than your deductible if you use your insurance. Insurance calculates the fair market value of your car 1 second before impact. If that’s more than you owe, your lienholder gets paid first and you get it rest. If it’s less than you owe, then your lienholder gets the entire payout and your gap kicks in to pay the rest of your own up to it’s limits. You get nothing, but you come away owing nothing and can start fresh and have the chance not get yourself in that financial situation again.
Gap insurance usually covers the difference between what you owe and the car’s value. Contact your insurer and provide all accident details for guidance.
Yes
I’m surprised that nobody has ask this question, not that it makes a big deal. Is the GAP insurance threw the OP’s auto insurance or coverage by a product sold by the dealer and added in to the loan. Either way the coverage will pay up to its policy limit 125% of the ACV is a common number but policies vary as to the amount over ACV that they will pay. It’s rare to exceed that but possible.
The reason I ask is who does he/she need to file the claim with being a agent, I prefer to see it on an auto policy. I feel it’s more seamless and can be cancelled at whatever the loan is no longer upside down BUT it’s common in my area for dealers to push this coverage for the additional commission and add it into the loan. Some, all but require, it on any vehicle that they arrange financing for. Even if you pay $10k down on a $20k vehicle. Obviously, it’s a total waste of money if you start out with 50% equity in the vehicle.
I’m stopping just short of it’s a scam but…… it is what it is.
Everyone is focused on the basic process, but aren’t actually giving you the full picture. Whoever is paying off the car will pay the actual cash value of the vehicle in most cases. Some will pay market value. And if you have the coverage, your insurance may pay the replacement cost, which would be ideal. Make sure you understand your coverage and the total loss process on your end before deciding who to file with.
Next you’ll receive a settlement offer that you can attempt to negotiate, but there really won’t be much movement in most cases. You need to be able to articulate why you think the vehicle is worth what you think it should be as well as provide evidence.
Once you get past that point, YOU need to make sure payments are getting to where they need to go. Until your loan is paid off, you will still be responsible for the loan and a payoff can be a somewhat long process without any issues. Payoff quotes are typically good for 10-14 days and then it needs to be processed. You may need to make your car payment until everything is done. If underwater, the GAP insurance company will work with your lienholder and insurance company to pay off the loan, BUT, it’s not uncommon for GAP insurance companies to dispute the settlement amount with the insurance company. As long as it’s in dispute, they’re not paying off anything. Which is why you need to keep an eye on the process.
Once all is said and done, either everything is handled or you will still owe a balance. You need to make sure that loan is zeroed out and closed. The above is not all encompassing. The process and timelines will vary depending on who is involved, but it should give you a better idea of what to expect
If you’re not at fault, the other driver’s insurance should cover your car’s value. Your gap insurance will handle any remaining loan balance beyond what their insurance pays. You’re not liable for the difference.