When Your Car is Totaled and You Still Owe Money on It
On your way to work this morning, you get into a nasty accident. Although you weren’t injured, your car is totaled. That’s unfortunate, considering you still owe at least a few thousand left on the vehicle. Does this mean you have to continue paying for a car that no longer drives?
Sadly, this is a common question many of our clients have. After your car has been totaled, you may have a large loan balance still needing to be paid off. If your car is so damaged that it would cost more to fix it than the worth of the car, your insurance company may deem it a total loss and pay you the fair market value of the vehicle. However, this amount may not cover the cost left on your loan. If that’s the case, then gap insurance will come into play.
What is gap insurance? When you bought your car, your salesman probably tried to sell you on this type of insurance. Guaranteed auto protection insurance, more commonly known as gap insurance, pay the difference between what the insurance company will pay for your car and what you actually owe to the loan holder. So for instance, if the insurance company will give you $3,000 for your totaled car and you still owe $5,000, your gap insurance will cover the $2,000.
It’s important to note that you may have this insurance and not even realize it. Some purchase agreements require the presence of gap insurance. So you may want to take a look at your policy or your vehicle purchase agreement to make sure you have this insurance.
But what if you don’t have gap insurance? What then? You may want to ask the insurance company to assess your vehicle again; chances are they underestimated your vehicle’s value. You may also want to speak with our Jersey City car accident lawyer first to see what your options are.
If you were injured or had your vehicle totaled in a car accident in New Jersey, we’re ready to help with your claim. Contact the Law Offices of Anthony Carbone today for a free consultation.