What Can I Do If My Car Is Totaled But I Owe More Than It Is Worth?
From the new car smell to the smooth handling, purchasing a new vehicle is an exciting experience. If you are like most drivers, then your car is one of your most valuable assets, and you carry insurance to protect your financial security in the event of a serious accident.
Some drivers forget, though, that vehicles can depreciate in value rather quickly. According to the Insurance Information Institute, the value of most new vehicles drops by 20 percent after just one year. If you have not paid off your loan and your car is totaled in an accident, the insurance company will not necessarily pay off your loan balance; rather, the insurer will pay the actual cash value of your vehicle up to the policy limits, minus the deductible depending on the terms of your policy.
If the insurance company’s payout is not enough to cover your car loan, you will still be responsible for paying the remainder. This is more common than people think. We are often asked “Why should I have to pay money when I did not cause the accident?” Unfortunately it just may be because the car is worth less than the actual cash value due to depreciation. The real question is can you put yourself in a similar car for that amount of money? If so, then you should be able to replace the car for what you are paid.
You may still have options for recovering compensation. For example, if you have guaranteed asset protection (GAP) coverage, this may help you cover the remaining balance on your car loan.
Attorney Paul Hammack will evaluate your insurance policies and the at-fault driver’s policy and investigate your crash to identify the best way to proceed with your claim. Call 864-326-3333 to schedule a free consultation with a personal injury lawyer in Greenville.
What Is GAP Coverage?
According to Allstate, GAP coverage kicks in when a vehicle that is financed via a lease or loan is totaled in an accident. If the insurance company’s reimbursement check does not cover what you owe, your GAP coverage should pay the difference up to your policy limits.
What Is New Car Replacement (NCR) Coverage?
This is another type of coverage that you should consider buying if you purchase a new vehicle. If you total your new car, your NCR coverage will replace it with a new one of the same model, make, and equipment. Some NCR policies limit the types of models or dollar amount available. If you have this coverage, it is usually better to handle the loss under your own coverage rather than the at-fault driver’s policy even if you have to pay the deductible. You just need to know your options.
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To get started with our Greenville personal injury law firm, please simply contact us online or call 864-326-3333 for a free consultation.