Does full coverage car insurance pay for the whole loan amount after an accident?

fighting saints

If you owe more than the car is worth you have to have Gap insurance In order to get paid any loan balance over the value of the car.

The insurance owes you the Actual Cash Value (ACV) of the car regardless of the loan amount. The ACV is based on what the car was worth just prior to the accident. Most companies will come up with a value based on the selling price (not asking price) of similar cars in your area.

Mark A

The claim adjuster above gave you good advice. Some additional info. you might find handy. They will give you the sales tax on the value of your car, but you have to ask. For example, if the car is worth $5k and you have 7% tax in your area, you can ask for $350 extra. Also, any recent expensive repairs such as new tires, they may pay for. Finally, if the accident is your fault, they will subtract the deductible from the value of the vehicle before you get your check. Remember, the ACV is an adjuster's estimate and if you are a good negotiator with good facts about your vehicle's uniqueness, you can get more.

artgrantz

The insurance would pay the value of the car. If you owe less you get to keep the difference. If you owe more you have to make it up.

Lisa

Only if you have loan-lease coverage on your auto policy.

mrbrown1602

From my understanding of insurance, and law, insurance will only cover what your car was valued at the time of the accident (depreciation). You also may be misunderstanding the term "full coverage", which could refer to comprehensive coverage, which would cover the contents of the vehicle or an accident where nobody else was involved.

The insurance company, if it is cheaper, will require you to get your car repaired. If it is not, they will likely declare the vehicle totaled, and pay you the full value of the car, minus depreciation. Laws regarding security interests vary from state to state... it is possible that you will still be responsible for the rest of the loan, it will just no longer be a secured loan.

knowyouragent.net administrator

This depends on the company you are with and the state in which you live. In most cases, no. If you total your vehicle and you owe more on it than it is worth (you're upside down) you will be responsible for the gap. When you purchase the vehicle however, the dealership has what is called gap insurance available. It covers the gap between the value and what you owe in that situation. They usually try to slip it in on you without you knowing about it for two reasons. One it covers their backs, and two the commission on it is great. So if you're in this situation, you need to check on whether you have gap insurance. Additionally, there are now several insurance companies who are covering the value you owe instead of what it is worth as a way of differentiating themselves from other insurance companies. You'd have to check with your specific company to know for sure though. Here is an article which covers the basics of what is covered on an auto insurance policy: http://www.knowyouragent.net/WhatisCoveredByaBasicAutoPolicy.htm

MondoSyler

no it will only pay the amount car is insured for so if your insurance company thinks your car is worth 5K and you owe 6k you will still owe 1K

loving30

i work in insurance claims in australia

if you have an 'AGREED VALUE' policy and insure if for six grand, then yes, the finance company gets paid back the amount owed (you get the balance- if any)

if you have a MARKET VALUE policy, then you only get the value of the vehicle at the time of the loss - regardless of what money is owed on it.

to prevent this from happening , a finance company will usually ask to see that the car is insured for a particular amount before they offer the finance. to have a policy actually specify a particular amount it usually needs to be an agreed value policy. market value policies will just state "market value" or something to that effect.

entidtil

no. Owner will still be responsible for the $1,000.

Enter Your Message or Comment

User Name:
User Email:
Post a comment: