- GAP Insurance for Cars
- What About GAP Insurance for a Totaled Car
- What happens when your car is totaled, and you still owe money?
- If my car is declared a total loss, can I still drive it?
- What to do with a totaled car that's paid off and no insurance
- Junkcarsus is a Trusted Totaled Car Buyer
A vehicle is generally declared a total loss car when the cost of repairing it exceeds the car's worth. However, if your vehicle is totaled and you don't have comprehensive or collision coverage, you may have to pay for a replacement vehicle out of pocket.
You pay for repairs to the wrecked vehicle, towing fees, the cost of a rental automobile for replacement, and any additional expenditures to property other than the car may be incurred. In this article, let’s discuss in detail what is a total loss vehicle and what to do with a car that is totaled with no insurance.
GAP or “Guaranteed Auto Protection” insurance is an optional car insurance policy that assists in the repayment of your auto loan if your vehicle is totaled or stolen and you still owe more than the vehicle's depreciated worth or total loss car valuation.
This coverage is only available if you are the original loan or leaseholder on a new vehicle. GAP insurance covers the difference between the depreciated value of your car and the amount you still owe on it.
Banks and lenders need collision and comprehensive coverage on your vehicle insurance policy until it's paid off. GAP insurance is intended to be used in conjunction with collision or comprehensive auto insurance.
Your insurance pays for your totaled vehicle up to the depreciated worth. But what if you still owe more on your loan or lease than the depreciated worth of the vehicle? This is where GAP insurance can come in handy.
Where to get GAP insurance? You can obtain GAP coverage on your vehicle from either your dealership or your insurer. Getting it directly from your insurance company allows you to add it to your coverage quickly and easily process a total loss claim - and you only talk to one person. However, not every insurance company offers this type of coverage, so you'll need to speak to your provider about it. In general, you'll need collision and comprehensive coverage to get GAP coverage. If you're buying a new car, this is already normal procedure.
My car is totaled, now what? How does GAP insurance operate in this scenario? Anyone who is behind on their payments is protected by GAP coverage. That is, if you have negative equity or owe more on your car than it is worth, GAP coverage will protect you.
Many car dealerships that lease vehicles will require lessees to obtain GAP insurance. This is because lease insurance only covers the vehicle’s cash value, and if you wreck it, the dealership would lose a lot of money. Though you'll still be responsible for paying off the difference between the market value and the lease sum, there's a concern that since the leased vehicle is basically lost, many people would simply walk away. GAP insurance ensures that the costs are met.
Is it worth adding to your insurance premium?
GAP insurance, like any other type of coverage, is entirely up to you. You may be concerned that having GAP coverage will raise your insurance prices. But, GAP insurance is only a minor element of your overall insurance package. That small addition can save you a lot of money when you need it (wrecking your car). Sure, you hope you'll never need it, but that's true of any insurance. Prices might differ depending on the insurer, but GAP coverage will only cost you approximately 5% to 6% of your overall insurance premium. So let’s say you have a $300-per-year coverage; you’re talking about a difference of around $15. Not a big deal, right?
If your automobile is totaled and you still owe money on loan, your insurer will pay your lender for the car's worth, and you will be responsible for any leftover balance if the check is less than the loan amount. When a car is totaled, insurers usually pay the owner the fair market value, also known as the actual cash value or ACV. Your automobile's ACV may be greater or lesser than what you owe on your car loan at the time of the accident, depending on a variety of criteria like its age, mileage, signs of wear and tear, and accident history.
Any insurance payments you receive must be applied in full to your outstanding debt. You're responsible for paying any remaining balance on your loan after you've applied for the insurance payment. GAP insurance can assist you in covering the gap between the ACV of your automobile and the amount you owe on your loan.
This will be a problem if you don’t have GAP coverage; this means that on top of the loss of your car, you’ll end up losing some cash.
Can you still drive your automobile if it's been deemed a total loss? First, what is the definition of a total loss? When your insurance determines that it is more cost-effective to replace your car rather than repair it, this is known as a total loss. In other words, a total loss happens when the cost of replacing a car is less than the cost of repairing the damaged one.
So can you drive a totaled car? If the salvaged car still runs and you can drive it without harming yourself or anyone on the road, the quick answer is yes. But, you won't be able to drive it immediately. You can lawfully drive a car that has been deemed a total loss if your salvage title has been cleared by your local DMV, and you'll need to carry the state's minimum auto insurance requirements.
The next question you’re probably asking is can you buy your totaled car back from the insurance company?
Yes, you can keep the vehicle. The insurance company will reimburse you for its ACV. If you want to keep the car, the auto insurance company will issue a salvage title, and you will have to shoulder all repair and maintenance costs. This is to ensure that you will not cause any road mishaps while driving a salvaged car.
In this scenario, your fully paid car is involved in an accident but for some reason, you don’t have insurance.
For a totaled car and no comprehensive insurance, your best option is to sell it, especially if it is in poor condition after an accident. You can get back at least some of its salvage value or the total loss car valuation. If there are other vehicles involved, you might use the money to pay for damages on the other party's claim against you (if the accident is your fault).
If there are no other vehicles involved, you can put that extra cash toward your next vehicle. In both cases, if you don't have collision insurance on a totaled car, you're basically out of alternatives. If your totaled vehicle is irreparable, you should sell it to at least get some cash.
So what to do with a totaled car and no insurance? Sure, you can pay for auto repairs and have service maintenance regularly, but it will be costly to rebuild a broken car. Even if you GAP insurance to shoulder some of the cost, keeping a salvaged car can cause a lot of headaches. You can sell your car for scrap to get some cash, but we have a better idea.
If you or someone you know is in this predicament, we recommend selling your vehicle to a trusted junk car buyer like Junkcarsus. We pay top dollar cash for junk cars at any condition, make, or model. Call (855) 547-1550, and our courteous car experts will answer all your questions. And, if you want to do a deal, we can offer same-day processing. We pay fast cash for totaled cars, so you get paid on the same day. We will even throw in free towing and help you with paperwork to really ease your troubles.
What happens if my car is totaled, and I still owe money?
This means that you still owe money on loan, and your insurance will play a big part here. Your insurer will pay your lender for the car's worth, but you will be responsible for any leftover balance if the check is less than the loan amount. If you don’t have GAP insurance to cover the difference, you can sell the car for its salvage value to pay the lender.
What do I do with a totaled car and no insurance?
You’d be responsible for the costs of repairing both your car and the other person's car if you caused the collision. Worse, operating an uninsured vehicle may result in penalties. For more information on the amount of money involved when your car is involved in an accident, read this article.
If my car is declared a total loss, can I still drive it?
Yes, but you'll have to fork out a lot of money for repairs. You can keep your car after the accident, and the insurance company will reimburse you for the vehicle's actual cost value. If you opt to keep the automobile, the auto insurance company will issue a salvage title, and you will be liable for all repairs. You'll need to get the total loss car fixed if it's still drivable. To get an idea if it’s better to repair or junk a car, read this article.