After a serious car wreck in St. Louis, MO, dealing with injuries is only part of the challenge. If your car is totaled, you might still owe a significant balance on your loan or lease for a vehicle you can no longer use. That’s where gap insurance comes in. Gap insurance covers the difference between what your standard auto insurance pays – the actual cash value of your damaged car – and what you still owe to the lender.
Many drivers don’t realize how important this coverage is until they find themselves facing thousands of dollars owed on a car they no longer have. Understanding how gap insurance works can help protect you from dealing with significant financial trouble after a major accident.
If you have been involved in a serious car wreck, contact our St. Louis car accident attorneys to seek compensation. Call us at (314) 436-9958.
How Gap Insurance Works After a Serious Car Wreck in St. Louis
Knowing how gap insurance works can help you see why it’s so valuable after a total loss in a car accident. Below is an overview.
- Your Primary Auto Insurer Determines Your Car’s Actual Cash Value (ACV): After the accident, an insurance adjuster will determine your car’s actual cash value. This is what they believe the car is currently worth. They’ll do that by looking at the year, mileage, condition, and other related factors to help them determine what the market value would be.
- Comparing ACV to Your Loan or Lease Payoff: If the ACV is less than what you still owe to your bank or leasing company, they will only pay you the actual cash value. This means even after your insurer pays you, you’ll owe more to cover your outstanding loan or lease balance.
- Gap Insurance Covers the Difference: Your gap insurance steps pays the remaining balance between the ACV and what you owe, saving you from out-of-pocket costs for a car you can’t drive anymore.
For example, if the insurer values your car at $20,000 but you owe $26,000, gap coverage will pay the $6,000 difference so you’re not left responsible for that extra debt.
Why Doesn’t Everyone Have Gap Insurance?
There are a bunch of reasons people don’t always have gap insurance, even though it can protect them financially after a serious accident.
Added Costs
Gap insurance usually costs extra, increasing your overall payments for insurance or your car loan. Some people actively choose to skip it to save money.
Underestimating the Risk
Many think their car’s value won’t drop faster than their loan balance, and some believe they could cover any remaining debt easily if needed.
Lack of Awareness
Not everyone understands how gap insurance works or why it’s helpful. Dealerships and lenders might not explain it well and don’t include it automatically.
While gap insurance isn’t mandatory, skipping it can expose you to unexpected expenses and should always be considered if you don’t own the vehicle outright.
What To Do If You Don’t Have Gap Insurance
Not having gap insurance after a total loss can make it seem like you have no options, but there are steps you can take to help manage or minimize what you owe.
Contact Your Lender or Leasing Company
Talk to your financial institution about what happened. They may offer options like refinancing, payment deferrals, or modified repayment plans that can at least help you manage the payments better.
Negotiate With the Insurance Company
Work with your insurer to make sure they accurately calculate your car’s value. You don’t have to accept the first number they throw out. You can show them comparable vehicles and show them that your car is worth more than they’re claiming. Sometimes an independent appraisal can support a higher valuation.
Contact a St. Louis Car Accident Lawyer
If you believe negligence contributed to the accident or insurer negotiations aren’t successful, speaking with a lawyer might help. An attorney can determine if you have insurance claims or lawsuits against at-fault parties, which could pay for the cost you owe for your totaled vehicle.
Even without gap insurance, you may still have options that won’t leave you paying a lot of money out of pocket. If you find yourself in this situation and need help, contact us today to schedule a free consultation with our St. Louis car accident injury lawyers at Meyerkord & Kurth.