If an insurance company were to discover that the cost for repairs on a damaged vehicle would exceed the same vehicle’s actual cash value (ACV), then it would declare the same vehicle to be totaled. Hence, it would buy that same piece of damaged property from the vehicle’s owner.
Who would get the check, if the driver had financed that damaged set-of-wheels?
In that case, the check would go to the lender. If the insured driver owed additional money on the financed vehicle, then the check would represent an initial payment towards the balance due to the lender. In other words, the driver’s obligations would not be met by delivery of that one check.
What about the insurance payments that had been sent to the insurance company?
The insurer would not expect the policyholder/driver to keep making those payments. Still, that freedom from insurance payments would be matched by the need to keep paying for the financed purchase/vehicle.
Is there any way that a consumer that has borrowed money, in order to buy a car or truck, could acquire protection from the need to pay for damaged property?
Yes, that consumer could purchase Gap insurance. The company that has promised coverage to its policyholder must pay the difference between what the policyholder might own any lender, and what he or she has already paid to the same lender. In other words, the insurer must cover the gap created by repair costs that exceed the ACV on any of the policyholders’ vehicles, as per personal injury lawyer in Georgetown.
Is that the only way to avoid making payments on something that has become useless?
It really depends on how closely the lender, the vehicle’s seller and the buyer have managed to work together. It also depends on how much money the buyer still owes to the lender.
Suppose, for instance, that the buyer did not owe a large amount of money, when the purchase/vehicle got totaled. In that case, the buyer might be able to propose a deal. The buyer might volunteer to cover the costs for the repairs, in exchange for a forgiveness of the money still owed to the lender.
That sort of arrangement would not work in all cases. It could be possible, if the lending agency had worked with the vehicle’s seller to promote the sale of some available vehicles. For instance, maybe a credit union had encouraged some of its customers to buy vehicles from a fleet at a rental car agency.
There was one man that agreed to become one of those desired buyers. He ended up putting a lot of time and effort into having the totaled wreck repaired. He was happy with the outcome, but never wanted to finance again.