Can I make my auto insurance pay me back for loan payments I made on a car they declared totaled?

Accidents happen every day in Newark, NJ. If you are involved in an accident that results in damage to your vehicle, you will probably want to file a claim. After the insurance company sends out an adjuster to appraise the damage to your vehicle, several things can happen.

You may receive a check for the cost of repairs. That check will be reduced by any deductible you may have on your collision coverage. Depending upon the amount of the settlement check, you may have to pay a portion of the repair cost out of your own pocket.

A second scenario might occur when a totaled car is declared by the insurance company. In such a case, it is determined that the cost of repairing the car will be worth more than the market value of the repaired car. While you may haggle a bit about the amount of the check, once you accept the settlement, the vehicle is no longer yours to keep. In most cases, the car is scrapped and you have to find another car if you want transportation.

A totaled car does not relieve you of any loan payments you have made or still owe on a financed vehicle. Your insurer has no responsibility to pay off your car loan. If you get $2,500 for your totaled car and owe $2,000 in payments, you must personally pay the loan company the $2,000. Once a car is declared to be totaled, you have to pay off the balance of the loan, even though you no longer have a car.

Cars depreciate in value and you may owe more on it than it is worth. An insurance company will never pay you more than the market value of your car to have it repaired after an accident. Remember, your name, and not the insurance company’s name, is on the contract with the finance company. They have no liability to the finance company, but you may.