For many of our clients, gap insurance comes in very handy. Gap insurance covers the balance on how much you owe after your car insurance pays you for the value of your car. For example, let’s say your car was only worth $15,000 before the crash, but you owe $20,000 on it. The car insurance company will only pay you for the value of your car and not how much you owe on it.
That is all they have to pay you legally. How much you owe on the car has nothing to do with how much they are required to pay you. So in this situation, all they will pay you is $15,000. They will pay that amount to whoever loaned you the money for the car. After paying $15,000, you will be left with a $5,000 balance on your loan – and no car.
As you can tell, this can be a very upsetting situation. If you have gap insurance, your gap insurance would pay the $5,000 balance. This would leave you with no car, but also no debt. Hopefully you do not get into a crash where your car is totaled, but if you do, gap insurance can prove to be very helpful.
If you have any questions or concerns about your car accident, call West Covina Car Accident Attorney, Lem Garcia, for answers to your most pressing questions.