Car insurance inquiry:
I was involved in a solo accident two days ago where my car skidded on black ice, resulting in significant damage. I purchased my car for $29,000 just two months ago, paying $15,000 upfront, so I didn’t opt for GAP insurance. The insurance company hasn’t declared my car a total loss yet or provided an estimate. I’m curious about what happens if they do classify it as a total loss. My deductible is $1,000—how would the payout process work in that case? What amount should I expect to receive? I currently owe $14,000 on the car (or $17,000 including interest).
I’m sorry to hear about your accident—those situations can be really stressful. Here’s a breakdown of how the payout would typically work if your car is deemed a total loss:
Insurance Valuation: Your insurance company will assess the current market value of your car, which may be less than what you paid for it, especially since new cars depreciate quickly. They will base this value on various factors like make, model, condition, and recent sales of similar vehicles in your area.
Deductible: Since your deductible is $1,000, this amount will be subtracted from the payout. For example, if your car is valued at $20,000, after applying the deductible, you would receive $19,000.
Amount Owed: If your car is totaled and the payout amount is less than what you owe (in your case, you owe $14k but with interest it’s $17k), you’ll still be responsible for covering the difference. In the example where your car was valued at $20,000, you would receive $19,000 from the insurance, but you would still owe $14k (or $17k with interest). Therefore, in this scenario, you’d have extra money after settling the loan.
If the insurance payout is less than what you owe, you would need to cover that gap out of pocket. This is where having GAP insurance would have helped, as it covers the difference between what you owe and the insurance payout if your car is totaled.
Make sure to stay in close contact with your insurance adjuster for updates and clarification on how they’re calculating the valuation. Good luck, and I hope it gets resolved quickly!