September 9, 2020 |
Car Accident Attorneys |
Maggie Karnath
If you have been in an accident and you still owe money on your vehicle, often the first question that comes to mind is, “Will auto insurance cover my car loan if my car is totaled in an accident?” The answer is in most cases “NO.”
Generally, car insurance only covers the remainder of your car loan if the fair market value exceeds the amount you still owe on your loan. There is another option, if you purchased “GAP” insurance, it would cover the remainder of your car loan. Plus, if the accident was not your fault, then the at-fault driver’s car insurance should cover the repair or replacement costs for your vehicle.
When you have been the victim of an accident, and have questions about insurance coverage, injuries, and legal options, the expert attorneys at The Barnes Firm can help with the answers and guidance you need when you need it.
A Total Loss
When the insurance company declares your vehicle a total loss, you may find yourself faced with paying the remaining balance your car loan. The financial repercussions can make the effects of the accident even worse than simply losing your vehicle. A total loss, in most instances, means the cost for repairing your car is more than a benchmark percentage (usually near 80 percent) of the value of your car.
If the cost of repairs is below that value, the insurance company will authorize the repairs, if not your vehicle will be declared a total loss. When a total loss declaration is made, the insurance company will issue a check for the value of your car and no repairs will be authorized.
If there is a lienholder on the vehicle, the check will list you and the lienholder (bank or finance company) as the payee. Why? The lienholder must be included to ensure the funds go to pay off your car loan because by law the lender had the right to first payment when a vehicle is declared a total loss.
Insurance Company Payment Shortfall
Because your car began to depreciate in value the moment you drove it off the lot, the amount owed on your car loan is usually more than the actual value of your vehicle. In addition, car values are determined by the market, as well as the mileage and condition of your car. The Kelley Blue Book can provide accurate car values estimates for most cars.
In the best situations, the check you receive for your totaled car will be more than the balance of your loan so you will have some leftover to go toward a replacement vehicle. If the check is less than the remainder of your loan, you remain legally obligated to make your loan payments until you pay off the balance even though you no longer have your car.
Call on The Barnes Firm After Your Car Accident
Following any car accident, especially one in which your car is “totaled,” call on the expert team at The Barnes Firm. The Barnes Firm is always ready to provide you with the best car accident lawyer who will put your needs first and strive to get you the compensation you deserve following an accident.
Call today for your FREE case evaluation with one of the best Los Angeles car accident lawyers at The Barnes Firm: (800) 800-0000.
Tags :
Injury Lawyers , The Barnes Firm , Total Loss Car Accidents
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