NEW YORK — Buying a car is a hefty expense that can take several years to pay off. Although it can be a relief to replace a worn-out vehicle, an unavoidable risk of buying a car is getting into an accident in a car for which you still need to pay back a loan. Although your insurance company will typically step in to cover your losses, such as the cost of repairing your vehicle, a Bronx car accident lawyer says there are many other expenses to consider.
First, you need to prioritize. Your health and wellness should always be paramount. If you’ve been injured in an accident, it would be wise to get medical treatment and contact an experienced car accident lawyer to help you get compensation for your injuries. Then, you can start to consider options for other things, like your vehicle.
Many times, repair can exceed the car’s value. In this scenario, how does the insurance company help you pay off your car?
How Insurance Companies Determine a Total Loss
Each auto insurance company sets its own rules for calculating a total loss. Generally, a total loss is when the cost of a car’s repair exceeds 80% of the car’s value. The percentage of the car’s value the repairs must exceed to determine a total loss varies by insurance company; however, 80% is relatively common.
Here is an example of how this 80% standard comes into play. Let’s assume your vehicle’s actual cash value was estimated at $10,000 on the day you got into a serious car accident. Applying the 80% rule, we can deduce that your insurance company will consider your vehicle a “total loss” if the cost of repair reach or exceed $8,000 or 80% of the value of your car ($10,000). If repair costs to reach or exceed $8,000, your insurance company will not authorize any repairs. Instead, they will reimburse you for the value of your car before the accident.
Getting Paid After Your Car Was Totaled
Once you receive the check from your insurance company, you can use those funds to pay off what remains of your loan. Your insurance company will likely name the bank or financial institution that loaned you money to buy the car (the lien holder) as a payee on the reimbursement check. This is to ensure that the funds you get go toward paying off the car.
What If The Insurance Company Doesn’t Cover My Car Loan?
Cars depreciate in value much more quickly than other assets. There’s always the possibility that the money you receive from your insurance company won’t cover what you still owe. When this happens, you’re still legally responsible for paying back what you owe. If you have gap insurance, it might cover the difference between the check you got and your remaining balance.
Getting the Most from Your Car Accident Claim
One way to give your accident claim the best chance at success is to work with the dedicated team of Bronx car accident lawyers with Cellino & Barnes. We help those who’ve been injured in accidents, and don’t know where to turn. With over $2-billion in recoveries for our clients, we know what it takes to get you fair compensation for your injuries.
Additionally, our “No Fee Guarantee” means you won’t pay us a dime if we don’t win your case. We have over 60 years of experience helping car accident victims throughout New York get compensation for their injuries. Call our firm at any time of day or contact us for a FREE consultation.
Cellino & Barnes (800) 888-8888