Posted on: 5 May 2017
If you have a loan on your car, you will be legally required to have full-coverage insurance on it. This type of coverage is great if you cause an accident that results in your car being totaled. The only trouble with this situation is that you might be left owing money on your car after the deal is said and done. Here are several things to understand about how insurance works when car owners total their own vehicles.
They will appraise the car with comps
The first thing an insurance company will do in this situation is determine the current market value of your car, and this value is based on the condition your car was in right before the accident took place. To do this, they will look for comps. A comp is simply a car that is comparable to yours. When they find comps, they will compare the values of these cars with yours and will come up with a value for your car.
The value they come up with will be the amount they give you to pay off your loan. If this value is greater than the amount you owe on your car, you may end up receiving a check for the difference. If the amount the insurance company calculates is less than the balance you owe, you could end up owing money. This amount is referred to as a deficit.
Being left with a deficit after your car is totaled is not a good place to be because it means you owe money on something you no longer own. If you had gap insurance, you would not have to worry about this. Gap insurance pays the deficit in situations like this one, and this would mean you would owe nothing on the car.
Your options if you do not have gap insurance coverage
If you do not have gap insurance, there are several things you could do to try to eliminate this deficit. The first is to research cars like yours to see if you can find some that show that your car was worth more money than the insurance company stated it was worth. The other thing you could do is fight your insurance company to pay for the deficit. There are times when insurance companies will agree to this simply because they value their customers.
Full-coverage insurance is great to have and is required with loans, but it does not always cover all your needs if you cause an accident. If you are left with a deficit and need help negotiating with your insurance company, you could call a car accident lawyer to help you with your case.Share