If you’ve been a car wreck or trucking collision, and your car is totaled, what does that mean for you? By law if a vehicle is damaged, and the cost of repairs will exceed 75% of the vehicle’s fair market value, then the vehicle is considered “a total loss.” If you agree that the vehicle is totaled, you have two options: first, the defendant’s insurance company can pay you the fair market value and they take the vehicle; second, the company still pays you, but they deduct the salvage value of the vehicle from the payment, and you keep your car under a salvage title. Then you see if you can get it repaired for the amount of money the company is paying you. If you keep the vehicle at this point, you are likely just accepting that you’re going to drive it until “into the ground,” knowing that you won’t be able to sell it again for more than the salvage value. You are also accepting the risk that your mechanic might not be able to get the vehicle road-worthy again, and if they can’t get it back on the road for you, then you’re out of luck.
A third-party insurance company does NOT have to replace your vehicle. They only have to pay you the fair market value (usually abbreviated as “FMV”). While some ads for insurance companies say they’ll replace your vehicle after a wreck, that’s your OWN insurance company, and it’s a special type of coverage which is not part of the standard North Carolina automobile insurance policy. Critically, this means that if you are upside-down on your car loan, and if you don’t have “gap” coverage to make up the difference, you are responsible for the difference between the fair market value and the loan amount. For example, if you financed your vehicle when you bought it for a loan amount of $10,000, and you still owe $9,000 when you get into a wreck, but the FMV on the vehicle is only $7,000 (due to mileage, vehicle age, etc.), if you don’t have gap coverage, you will still owe $2,000 to the finance company, and you have no way to recover that money, not from the insurance company, and not from the defendant individually. That’s one reason that borrowing 100% of a vehicle’s cost is VERY financially dangerous if you don’t have gap coverage.
Gap coverage is a specific type of insurance sold by most reputable car dealerships to cover all or part of your vehicle loan to avoid a situation where you may owe more than the vehicle is worth. Some banks may require your to buy gap coverage if you are financing a vehicle when you are buying it from a private individual. It’s almost always a good idea to have that coverage.
If you’ve been injured in a car wreck, trying to figure out the basics of property damage claims can be a hassle you don’t need. At the Miller Law Group, we think most people should handle their own property damage claims, but we will give you the advice you need to hopefully move this part of your claim quickly, so you can focus on your medical treatment. If you’ve been hurt and you need help, contact us today for a free consultation. We’ll determine if you need a lawyer, and if you do, we’ll give you the information you need to handle your property damage and rental vehicle, and then we’ll get to work on your personal injury claim. Contact our award-winning lawyers today. We’ve got your back.