What would you do if your car insurance company refused to pay for the full balance of your car?
Saturday, January 24th, 2009 at
3:29 pm
Alexandria B asked:
I have already contacted The Dept. Of Commerce & Insurance about the situation, but still no justice! The wreck was not my fault and they know that, yet they still will not cover the full balance of my D**M Car! I’ve been with them for 8yrs!
I have already contacted The Dept. Of Commerce & Insurance about the situation, but still no justice! The wreck was not my fault and they know that, yet they still will not cover the full balance of my D**M Car! I’ve been with them for 8yrs!
Tagged with: Car Insurance Company • Dept Of Commerce • Insurance
Filed under: Car Insurance
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They never cover the balance of your car.
They cover the value of your car.
80 % of cars with outstanding loans have negative value, meaning people owe more than the car is worth.
There’s more fine print in insurance policies than just about anywhere else. Most likely, your policy only pays for wholesale value, not retail. Loyalty as a customer MAY be rewarded by a “loyal customer discount.” I would scrutinize your policy for the past eight years to see how much “loyalty” has benefited you.
Shopping auto insurance doesn’t rank among the top 10 favorite things to do…but it should be done annually. There are hundreds of insurance companies. Be sure you’re comparing apples to apples with identical deductibles.
Hello
If you mean they will not pay what you owe on the car, Say £4000 then they won’t
The value of your car, Say £3000 which is what it is insured for, (they asked you the value of your car you said )? can be sourced by checking Parkers guide or similar, When you claim they pay you the up to date value. Now £2400
You say your insurance so i presume you are claiming off your own insurance so they will deduct your excess Say £150 from the £2400 which would be £2250 and if they leave you with the car they will deduct another £30-£40 for the scrap they assume you will get when you scrap it. So you would end up with £2210-£2220
If they are not offering the write off value then try and get some from auto trader or similar to show what they are selling for
Andy C
The others are spot on. In the US this is what is known as being “upside-down” in a car and insurance covering this is called “gap insurance” and is finding increasing popularity at car lots.
In a 5 year/60 month vehicle loan nearly 100% of people are upside-down for the first 3 years (not just 2 1/2) of vehicle ownership. Sadly enough, in today’s market, the second you drive that car off the lot it loses between 25% and 40% of it’s value dependent upon make and model. Vehicles used in rental car fleets get hit the hardest and vehicles that have companies that refuse to reduce their price for fleet sales (Honda is one) usually retain their value pretty well. A rental car company, in some cases, can actually sell the car they bought for more than they paid for it. The mechanics behind that are irrelevant to this discussion.
The only resolution you really have is to refuse your insurance company’s officer, refuse the other person’s insurance company’s payment and file a lawsuit against the person who is at-fault. …and during this time you will have to continue payments to the bank. You may lose the court case which means you are stuck with the vehicle and the payments.
Regardless of how long you have been with them the policy stands as it is written. If you don’t have gap insurance you are pretty much fouled up if you want to get this issue taken care of quickly.
Auto insurance is actual cash value at the time of loss, no matter who you buy it from. It is insurance on the car, not the debt, and the loan owing has no bearing on the actual value of the car, which depreciates over time. The insurance company is not responsible for loans that put people in the position of owing more than the car is worth. The exception is brand new cars, where many companies offer a replacement cost option, for an extra premium, but that only lasts for the first 2, sometimes 3 years, depending on the company, and is sometimes available for used cars not more than 1 year old.
This option is not available from every company or in every state or province.
really nothing u can do but sue and then they will prob win and u will be out more money
What do you mean by “full balance” ? If you mean they won’t pay for the full balance of what you owe on the car, then they are correct. All any insurance company will pay you in the event they total your car is for the “fair market value” of your car at the time of the accident. What you owe or what you don’t owe has absolutely nothing to do with their payment to you.
The insurance company does not owe the balance of your note.
The fact that the accident was not your fault – or that you have been with them has nothing to do with what your car’s worth. It does not matter if you have been with them for 100 years….that still has nothing to do with how the claim is handled.
So – what does your car insurance owe on your car.
They owe the Actual Cash Value (ACV) or the Fair Market Value of your car. This means – they owe you what the car could have reasonably been sold for just prior to the accident given it’s age, mileage, options, conditions.
When you owe more than the car is worth – you are “upside down”. With gas prices high, the value of large trucks and suv’s has dropped. A lot of those people are upside down.
Why can’t the insurance company pay more than what the car is worth? The purpose of insurance is to put you back where you were before the accident – not in a better position. Before the loss you owned a car that was worth less than the amount of your note. If you went to sell or trade the car you would still have to pony up the difference. If the insurance company paid the value of your note- then it would put you in a better position after the loss than you were in before. That’s contrary to the purpose of insurance. Also – it would encourage people who are upside down on their vehicle notes to burn their cars up and file fraudulent claims. Again, counter to the purpose of insurance.
Can you sue the at fault driver for the difference between what the insurance pays and the value of your note? Yes but you will lose.
In a court of law, the at fault driver only owes you that fair market value of your car. It’s not their responsibility to dig you out of the financial hole you are in. They only owe you what the car could have been sold for.
If you purchased Gap insurance when you bought the car – they will step in to pay the difference between the value of the car and the balance of your note. If you are upside down due to late payment fees etc- gap does not pay that.
What do you do if you don’t have gap insurance? Contact your lender. You will still owe the balance of the loan. Many lenders will do a substitution of collateral. See what you can work out with them.
The insurance company doesn’t care what the balance of your car loan is, they are only contractually required to pay the actual cash value or fair market value of your vehicle. If you owe more than that, it simply isn’t their problem.
Alexandria B, I recommend an online insurance quote. It’s free and quick to do.
Hope it works out
Take them to court.
A site I’ve used to compare quotes in the past …
All the best to you.