What happens once gap insurance covers my loan?
My wife and I were in a not-at-fault accident. The other driver's insurance is covering the cost of our vehicle, which is totaled. We do have gap insurance, but I'm wondering what happens after that. Am I responsible for getting a new car?
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Answered on May 07, 2021
“When you get into a not-at-fault accident and your car is deemed a total loss, the responsible party’s insurance will typically pay out the actual cash value of your vehicle.
If the actual cash value of your vehicle is less than what you owe on your loan, your gap insurance will cover the difference. With your loan paid off, you’re able to purchase a new car.
Had you owed less on your loan than your vehicle was worth, you would have received the remaining difference, which you could have put toward a down payment on a new car.
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