my car was total in an accident and my insurance does not want to payoff the entire loan what do i do.?

Question

I have full coverage on my car, I would like then to pay off the entire loan of the car; what do I do to get them to pay it off.

Answer 1

Unfortunately, there may not be much that you can do in this situation. You'll have to absorb the loss yourself.

Insurance companies only pay "fair market value" on a total loss. With most lenders willing to lend up to 100% of the purchase price of a vehicle, the fair market value is often lower than the loan balance, especially in the early years on the loan. In the car business, this is referred to as being "upside down" meaning that you owe more than the car is worth.

Then of course you also have to deal with the deductible on your policy. Even if your loan balance was exactly at fair market value, you'd still be out your deductible.

You might try pleading your case with your insurance company, especially if your loan balance is close to the fair market value. They won't budge on the deductible, though; that's entirely up to you. Check the Kelly Blue Book or NADA Guide value of your car. If the insurance company is offering something close to the retail value there isn't much you can do and a lawyer isn't likely to be able to help a lot. And once you pay the lawyer you'll be even farther in the hole.

There is a new insurance product coming into favor these days. It's offered both by insurance companies and lenders and is referred to as "Gap Insurance." As the name implies, gap insurance covers the difference between fair market value and your loan balance. Costs vary from free (USAA Federal Savings Bank if you're eligible and insure with USAA) to a couple of hundred a year. (I got a flyer in the mail from GMAC offering free gap insurance if I bought a new GM car and insured it with their captive insurance company -- can't say if that is a good deal or not since I'm not in the market for a GM and have no intention of leaving USAA.) If you don't have gap insurance now you might want to consider it for your replacement vehicle.

Answer 2

Auto insurance only pays what your vehicle was worth prior to the accident that totalled the vehicle. You can always do your own research to justify what YOU think the car is worth. Find adds in the paper or on the internet (in your local area) to find the same kind, year, model, miles and features and present your insurance company with what you found. They are suppose to pay you the amount that you could sell it for before the accident. Many times people are upside down on their vehicle. That is what Gap insurance is for. But people get different deals and interest rates when they buy cars, so the only way to make the value of a car be fair across the board, is to only pay the fair market value of the car. If I buy a car and pay 20% interest rate because I have bad credit, and I still owe a ton of money on the vehicle, then why should the insurance company pay me more for my car, when another person wouldn't get the same amount. It is the only way to be consistent and fair in the settling of auto claims. :)

Answer 3

All the letters from attorneys in the world won't change the fact that you signed a contract. Your policy should explain they will pay the actual value of the vehicle and if your car is worth less than the loan your out of luck, but sometimes you can get the loan company to finance what you owe plus a new loan to replace the car. Sorry.

Answer 4

If the 'book value" (i.e. Kelly Blue Book) of your car is less than the payoff on the loan, and if you don't have "gap insurance" (which you very likely do not), then you don't have a choice but to take it in the shorts on this one.

You will have to find a way to payoff the rest of the loan that the insurance company doesn't cover.

That's the breaks, I'm sorry to say.

:-(

Answer 5

As far as I know comprehensive insurance is not comprehensive. We have to pay a top-up every month in order to avoid the situation you're in now. When we bought the car we were offered this option. We could take it or leave it. If we left it we were told that should the car be written off for any reason we would have to 'pay in' toward the balance that will be left outstanding. Sorry, you seemed to have been misinformed from the start. Not sure that you can do anything about it now :(

Answer 6

You can't do anything. Full coverage provides coverage for the car upto the actual cash value - not market value.

You should have bought GAP coverage which would pay off the loan - but its too late now.

Answer 7

If you do not have gap coverage and your car is worth less than your loan you have to pay the difference. That is why gap was created becaus you lose a lot of your cars value once you take it off the car lot. Check out nada to find your cars worth.

Answer 8

It is NOT the insurance company responsibility to pay off the loan on the car... they ONLY pay damages to your car (if you carry Comp & Coll)

Thants why you should have gotten what they call GAP insurance from the dealer when you bought the car...
That insurance will pay off the loan remaining ...

So im sorry my friend .... you should have done your homework before you...bought the car...

I work in car insurance I should know

Answer 9

Do you have proof of all payments made for her rent and wages? If so, get the documents and submit to the insurance company. YOU still owe for her injuries, but possibly with your prior payments, could reduce the amount you will owe. On any injury claim, you DO NOT owe for someones rent, but you would owe for wages. My guess is that you thought (stupidly) that by paying wages and her rent, that it would absolve you of your responsibility on her injury, which is doesn't. For someone to have surgery due to an accident, is not a minor accident. Money may have been tight, but it is going to get a lot tighter now, since you will need to most likely get a payment plan set up to pay back ALL for your negligence in this accident.

Answer 10

Read your policy. It's not their job to pay off your loan. It's their job to pay you a fair price for the value of your car. If your car isn't worth the amount you owe on it, that's your problem not theirs.