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Is it legal for a car insurance company to not pay off the loan of your car if it was totaled?

Okay, so I was rear-ended on Friday, my Jeep was totaled. The pay-off on my Jeep is a little over $6,900.

Their insurance is only giving me $4600. My insurance is $6,230. So, I'm going to go with mine...but that is still leaving me with no car and $800 in debt!!

Is this legal? Can they do this to me?! It's soooo not fair!!!

Any loop holes?! Thanks!!!

Chelle }}i{{

Answer Question

Asked by Musical-Monkey at 5:42 PM on May. 21, 2009 in Money & Work

Level 1 (0 Credits)
Answers (6)
  • no loop holes. Its called gap insurance you get with your loan if you wanted it payed off if something happened. sorry

    Answer by aeemom at 5:44 PM on May. 21, 2009

  • Agree you need to have GAP insurance, or LowJack. They can do it.

    Answer by 2-1CavWife at 5:57 PM on May. 21, 2009

  • Yes it is legal

    Answer by itsallabtthem84 at 6:08 PM on May. 21, 2009

  • Yes, when they total it they pay off what your car is actually worth, not what the amount of your loan is. My in-laws also just totaled their van and they still owe the bank $8k beyond what insurance paid. The next car you buy, get the GAP pays for the difference.

    Answer by slw123 at 7:41 PM on May. 21, 2009

  • totally legal.. most companies average the red book value and blue book value of your car... if you have collision and your insurance in paying more go with them.

    Trust me, I've been there. I was out $1200 for my accident.. not including the rental I had to pay out of pocket, that the insurance company was still $100 short on..
    Or the other drama I went through (it was a hit and run, guy blew through a stop sign, and I was trapped in my car, when I was 8 months pregnant... if it wasn't for the witness tracking him down, and helping me out, I would be out over six grand... thankfully aside from a bloody nose from the air bag, me and the baby were perfectly fine).

    Answer by xxhazeldovexx at 11:47 PM on May. 21, 2009

  • Insurance companies only pay actual cash value unless you purchase extra coverage such as GAP insurance. If you can find documentation to show the actual cash value may be more than they are offering, you might be able to fight it. I am an insurance agent and helped my friend fight his by using values on comparable vehicles from places like auto trader. Also, ask the company for a detailed description on why they are offering the amount that they are. Check to see why certain deductions are being made and see if you can argue it. Good luck.

    Answer by lilkgfan at 11:11 PM on May. 31, 2009

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