Purchasing a new car comes with many perks, but one of the downsides is that it immediately depreciates once it is driven off the lot. Your vehicle loan, on the other hand, decreases much more slowly. This can create a gap between what an insurance company gives you for the pre-crash value of your car vs. what you still owe on your loan after a serious wreck that totals the vehicle. The solution is gap insurance. Make sure to speak with an experienced car accident lawyer in San Antonio for legal guidance.
What Is Gap Insurance?
Gap insurance stands for Guaranteed Asset Protection insurance. It provides coverage when a loan amount is greater than what the vehicle is worth. Gap insurance is especially helpful when a new car gets totaled in an accident, meaning it is a total loss or worth less than the cost to repair the vehicle.
If you still owed $15,000 on a car loan at the time of your car accident, for example, but the at-fault driver’s car insurance company only gives you $10,000 for the market value of your totaled vehicle, you would be responsible for paying the remaining $5,000 to pay off your loan. Gap insurance can cover this expense for you, minus a deductible.
Do I Need Gap Insurance?
Gap insurance is an optional, not required, type of coverage in Texas. The minimum required amounts of vehicle insurance in Texas are $30,000 in bodily injury liability coverage per person, $60,000 in bodily injury liability coverage per accident and $25,000 in property damage liability.Â
Gap insurance is an optional add-on, along with collision, comprehensive and rental car insurance. If you are driving a new vehicle and have a loan, however, it can be a good idea to purchase gap insurance to make sure your losses are fully covered if the vehicle gets totaled. New vehicles depreciate rapidly, exposing you to personal liability without the right insurance.
How to File a Gap Insurance Claim
Gap insurance only pays for the specific situation where you do not receive enough in other coverage to pay off your loan balance after a serious car accident. It does not pay for your medical bills or cover your liability to others. If you wish to file a claim with your gap insurance after an accident, contact your insurance provider to report the crash.
Explain that you were involved in a car accident, but do not admit fault. If you’re asked to give a recorded statement about the crash, politely decline. The at-fault driver’s liability insurance should pay for your medical bills and property damage, including your vehicle’s pre-crash actual cash value. If this amount is less than the remaining balance on your loan, file a claim for gap insurance coverage with your own provider for the difference.
You will not have to worry about getting the coverage from your insurance company and sending it to your lender; the insurer will send the payment directly to the loan servicer, up to the limits purchased on your policy. If there is anything left over after your gap insurance is exhausted, you will be personally responsible for this amount.
How a Car Accident Lawyer Can Help
A gap insurance claim may appear straightforward, but insurance companies can make it difficult for clients to get fair payouts. The insurer may dispute the value of your vehicle, for example, which can affect your gap insurance settlement. You may need to hire a personal injury attorney in San Antonio to negotiate on your behalf for a fair value. A lawyer can also help you explore your other legal options, such as filing a personal injury claim against one or more parties. Learn more about your individual case during a free case evaluation at Hill Law Firm Accident & Injury Lawyers.