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My Car was Totaled, But I Still Owe Money

An insurance company's definition of "total loss" is different than the average driver's. When you think of a car that's been totaled, you probably think of something crushed beyond recognition. However, a car that's been in a simple fender-bender can be considered a total loss depending on the age of the car and how expensive it is to repair. This can be frustrating if you still owe money on your vehicle.

Most insurance companies consider a car needing repairs that exceed 80 percent of its current value a total loss. If you still owe money on the vehicle, then the check for your loss will go straight to the bank to pay off your vehicle. This may be adequate if you have a used car, but new car owners know all too well that the minute you drive off the lot in your brand-new car, you could be underwater on your loan. That's because new cars depreciate as much as 11 percent the moment your tires hit the pavement.

One way to prevent this situation is to purchase gap insurance from your car insurance provider. This insurance covers the "gap" between what you owe the bank and what your car is worth at the moment it's considered a total loss. Another way to prevent this situation is to put at least 11 percent down when you purchase a vehicle, or enough that you are never underwater on your payment at any time during the life of the loan.

Keep in mind, too, that if your car is totaled and the accident was not your fault, you may be owed a settlement by the other insurance company, not just a check for your car. Medical bills, time lost from work and pain and suffering should all be compensated.

At Bouchillon, Crossan & Colburn, L.C., our attorneys have more than 40 years dedicated to giving clients the attention, advice, support and empowerment they need to effectively meet their goals. We are committed to the principle that all persons shall have equal justice under the law. If you or a loved one has been injured and is seeking a qualified personal injury attorney, contact our Huntington, West Virginia office to speak with an attorney about your case, or call 304-523-8451.

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