car accident

by Guest » Thu Mar 12, 2009 09:59 pm
Guest

I recently had an accident and the shop my car was brought to said it was totaled. I only had liability with no comp or collision but i have gap. I put $2100 down, will i have to keep paying for the car?

Total Comments: 5

Posted: Fri Mar 13, 2009 12:27 am Post Subject:

Gap insurance is not a suitable replacement for comprehensive / collision insurance. Here is how gap insurance works:

You purchase a vehicle from a car dealer for 10,000.
You finance 12,000 to cover 2,000 in negative equity from your trade-in. You purchase gap coverage to supplement your car insurance.
You total the vehicle which is now worth 7,000 and you still owe 9,000. Your car insurance company pays 7,000 and the gap coverage pays the other 2,000.

Normally if you finance a vehicle, you are required to carry comp / collision insurance. I'm not sure why the dealer would have sold you gap coverage...because it will NOT pay the gap between 0 and whatever you owe!

Now if they sold you some type of insurance policy that is more like a term life policy designed to pay off the car (I have seen some of these)...they may refer to it as gap or complete pay coverage. It might pay the vehicle off but I've never heard of an actual case.

You need to contact whomever sold you the gap coverage (car dealer, etc) and find out exactly what it covers. If nothing else, find out why the shop has said it was totaled...you may be able to pay enough to have it fixed.

Worst case scenario is not pretty. If your car is totaled and there is a balance due, they will NOT allow you to keep making payments. They can demand payment in full. A good attorney can help you make arrangements with them / negotiations.

If you can provide any more information, I'll see what I can find out!

Posted: Fri Mar 13, 2009 05:56 am Post Subject:

Hey, can one buy gap insurance without buying collision and comprehensive coverage? :shock:

I guess this gap plan would only payout if its a third-party claim.

OP, please be explicit. Are you filing the claim with your insurer or the other guy's insurer?

Posted: Fri Mar 13, 2009 12:00 pm Post Subject:

How on earth is your vehicle carrying a loan and not have collision and comp coverage? All lein holders require this...

Was the accident your fault or is another insurer involved?

Posted: Fri Mar 13, 2009 03:34 pm Post Subject:

Wow I am surprised. I have never seen a person not have to carry full coverage on a financed vehicle. I would think GAP will not pay anything and the lender is going to want their money or have you continue to make the monthly payment.

Posted: Sat Mar 14, 2009 10:28 pm Post Subject:

The more I think about the way GAP coverage is typically worded...it normally does not pay "what the insurance company does not." It normally pays the difference between the NADA (or other accepted VALUE)...and the loan payoff. So this individual's gap coverage may pay a little bit, but it certainly will not pay for the value of the vehicle.

Unfortunately, the lender will no longer have adequate collateral and will demand a payment in full (or auction the car for parts and file a judgment for the remainder). I sincerely hope that the individual didn't cancel him comp / collision without the knowledge of the lender. There may be more to the story (such as a buy here pay here lender, etc.)

I'll try and help you with more specific information if you would like to post or send more info!

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