What happens if your car is totaled in a Chicago auto accident and you owe more than it’s worth? Be prepared to pay. But there is a way to protect yourself. Call my office for a free consultation at 847-305-4105.
According to an article on insurance.com, Experian Automotive said around 86 percent of new car buyers finance their vehicle and the average new car loan is about $30,000 for roughly 68 months. So, people are financing millions of vehicles. As such, drivers in Illinois who get in a Chicago auto accident are often faced with paying money owed on newly purchased vehicles that are involved in accidents.
You purchase a car for $30,000. You put $1,000 down and you finance $29,000 through a bank or the auto dealership’s finance company. A few months later you are involved in an accident and your car is totaled. You file a claim with your auto insurance company and they determine that the actual cash value (ACV) of your vehicle is $27,000. What happens?
Your auto insurance company will write a check to your finance company for the ACV of your vehicle and you owe the remaining balance outstanding of $2,000. It’s unfair, you did not cause the Chicago auto accident. Yet you are still on the hook for the balance outstanding.
The only way you can protect yourself from this situation is to purchase Guaranteed Asset Protection (GAP) insurance. In the situation above, your GAP insurance would have covered the difference between what your vehicle is worth and what you owe.
You can purchase GAP insurance when you purchase your vehicle from the dealership or you can likely purchase it from your auto insurance company.
If you don’t have GAP Insurance
How do you pay the balance owed if you do not have GAP insurance? Generally speaking, my clients in this situation have been able to continue to make their monthly payments until the balance is paid off. You may also be able to contact your finance company and figure out an alternative payment arrangement.
That’s little solace to someone who just lost their investment in a vehicle including their down payment, has to pay money for a vehicle they can’t drive and may not have money for a down payment on a new vehicle.
If you want to fight it
If you are unhappy with your auto insurance company’s valuation of your vehicle, you do have the option of contesting the valuation of your vehicle. You can try to get your own appraisal from a resource like Kelley Blue Book. That probably won’t work and as such, you will likely have to hire an appraiser to provide a new appraisal to give to the insurance company.
If that doesn’t work, you will have to demand arbitration from your insurance company. If you are dealing with the insurance company for the driver who caused the accident, your only option would be to file a lawsuit.
Do I need an attorney?
Most personal injury attorneys won’t get involved in a matter that only involves property damage. It’s not that I don’t want to help. However, as a Chicago auto accident attorney, I represent people who suffer injuries in auto accidents.
Regardless, I am happy to speak with you about how to proceed with your claim against the insurance company. Call me for a free consultation at 847-305-4105.