Involved in accident-what do we do if our vehicle is totaled but we were still making payments?

The insurance company will pay for what the truck is worth. The check will be written out to you and your lien holder (bank or lender). So if you owe $23k and it's worth only $11k then the insurance only pays the $11k. Your lender will get that. Then your gap insurance should pay the rest of what you owe ($12k) and then your truck will be all paid off and you will be left with exactly nothing. And the insurance company will take possession of the truck and sell it as junk or whatever to get whatever money they can squeeze from it.

But you can see why your lender required you to get gap insurance otherwise they may have been out $12k if you failed to pay it.

You keep making payments until either you or the insurance company pays off your loan.

The ins. co. will pay the bank, not you. And they will only pay the blue book value of it, you will have to pay the rest.

Call the GAP insurance people. That's what it's for.

If it is totaled, the check for the pay off will go to your lien holder. Since the payoff will not be enough, you use your GAP insurance for the difference. After all is said and done, your loan will be considered paid off.

You are then free to buy/lease/finance a replacement vehicle.

It is expensive and foolhardy to borrow more than a vehicle is worth.

Still have questions? Get off of the computer and ask the liable insurance company, your insurance company, your lender, your GAP insurer for information and advice.

They do not write you a check for anything.

The guy's insurance writes the loan company (not you) a check for what the truck was worth.

The gap insurance writes the loan company (not you) a check for the difference between what you owe and what the truck was worth.

The ONLY thing that you get it to avoid having to pay the loan.

Standard Insurance pays the market value of the vehicle. at it's current mileage and condition before the accident. Gap insurance pays the rest. Hopefully it's enough to cover the deficit, but you'll still have to pay the deductible, whatever that is. So, you end up with nothing plus money out of your pocket, although you (or your insurer) might be able to subrogate against the other driver to at least recover your insurance deductible.

This experience should teach you several things: (a) read and understand the fine print in all insurance policies and vehicle purchase contracts (b) never buy more vehicle than you can comfortably afford. Payments and insurance shouldn't be more than 1/5 of your gross income. (c) Negative equity in a vehicle is just plain stupid. Always strive to maintain equity above parity, which means a big down payment, a shorter term loan, and payments that exceed depreciation.

Good luck. Hopefully your credit is still good enough to purchase another vehicle and hopefully you can make a 20% down payment.

Damaged vehicles involved in accidents and towed are usually sent to a wrecker yard that charges a fee to remove the vehicle and charges for every day the damaged vehicle remains in the lot. There should be information on how to find which lot your car was sent to and how to pay the tolling bill and rental charge. Of course, you will need a wrecker to carry your damaged car to a repair facility. You still must make payments on your car.

harrald