If I have gap coverage, will it really pay off the balance of my loan, even if it is really high?
I had an at-fault accident last week. I still owe a lot on my loan, over $20,000. I bought gap insurance when I bought the car, but I am nervous it won't pay out that much. Will I have to pay out money for the accident?
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Answered on Apr 29, 2021
Shannon is an expert in personal lines liability insurance with 13 + years of insurance industry experience. She also served as a special insurance liaison to AARP members for 6 of those years. She is a graduate of UL Lafayette and currently resides in NY with her family. Shannon is also an amateur juggler, ukulele player, and is a time travel paradox theory enthusiast.
“Don’t worry, if you paid for gap insurance, you will be covered. Once the claim is settled, your insurance carrier will write a check to your lienholder in the amount of the actual cash value of your vehicle.
This is paid out from your collision insurance. In most cases, this amount is minus whatever your deductible is. The deductible is the amount you are responsible for paying and it will be stated in your policy. It is usually $500 or $1,000.
If you haven’t yet, get in touch with your lienholder and let them know of the accident. Once the bank has the insurance payment, the gap coverage will be activated and they will get the check for the difference. “
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