Picture this scenario: you’re driving your newly financed car, cruising down the road with a sense of pride and ownership. Suddenly, an unexpected turn of events leads to a collision. In such a distressing moment, a multitude of questions arise, and rightfully so. What happens if you crash a financed car with insurance?
In this article, we’ll delve into the details of what happens when you crash a financed car with insurance and provide valuable insights to help you navigate these situations effectively.
What Happens if You Crash a Financed Car with Insurance?
When you are in the unfortunate situation of crashing a financed car, it’s important to understand that your financial responsibilities don’t simply vanish. You remain liable for the remainder of the loan despite having insurance coverage. This means you might be making payments while the car is being repaired or, in more severe cases, paying off the car loan while considering replacement options if the insurer deems the car a total loss.
The silver lining is that financial institutions typically require buyers to carry full coverage auto insurance on financed vehicles. This means you have some level of coverage irrespective of the accident’s circumstances. Let’s delve into the potential coverage options at your disposal:
- Collision Coverage:
Collision coverage serves as a no-fault policy, catering to your vehicle’s repair or replacement costs, up to the policy’s maximum. Keep in mind that you may need to pay a deductible as part of the claim process.
- Gap Insurance:
If the outstanding loan balance surpasses the insurance payout, you’re responsible for covering the difference. Gap insurance is an option worth considering to safeguard yourself from this scenario.
- Fault-Based Insurance Claim:
According to the Florida Department of Highway Safety and Motor Vehicles (FLHSMV), drivers are mandated to have property damage liability policies, which cover up to $10,000 of damage to another person’s vehicle if you cause a car accident. This safeguards you from personal financial liability for the damage caused.
Gaining a clear grasp of declaring a car as totaled holds significant importance. In general, an insurance company labels a car as “totaled” when the expenses for repairs surpass 80 percent of its present actual cash value, according to Florida Statutes § 319.30(3). When this criterion is met, the insurance provider will offer compensation for the vehicle, and subsequently, you’ll transfer the title to them.
Once both parties have reached a settlement agreement, the insurance company will issue a check covering either the outstanding loan balance or the policy’s maximum limit. This check will be directly forwarded to the respective bank or financing institution. In cases where there’s a surplus amount, these funds might serve as a down payment for a replacement vehicle.
What About Additional Damages in a Car Accident?
While certain collisions result in property damage alone, it’s important to acknowledge the potential for injuries as well. When an individual sustains harm in a car accident, they confront supplementary costs and setbacks. Florida’s legal framework outlines a precise approach for seeking compensatory damages tied to injuries sustained during such incidents. The state mandates that all drivers maintain a personal injury protection (PIP) policy in adherence to its no-fault regulations, as stipulated in Florida Statutes § 627.730.
PIP policies offer swift access to funds for medical expenses and lost income, covering approximately 80 percent of medical care costs and 60 percent of lost income, up to a specified maximum (usually around $10,000).
However, there are instances where PIP coverage falls short. Severe injuries might necessitate further financial support. Victims might consider pursuing a fault-based lawsuit against the negligent driver in such cases. Compensation for these lawsuits can include:
- Pain and suffering damages
- Current and future medical expenses
- Income losses
- Reduced earning capacity
- Property damages
Discuss Your Options With Our Auto Accident Attorneys for Free
In the wake of a car crash involving a financed vehicle and wondering what happens if you crash a financed car with insurance, understanding your legal and financial obligations is paramount. At Pacin Levine, P.A., our dedicated auto accident attorneys are committed to comprehensively evaluating your case and devising an optimal strategy for a successful outcome. If you’re seeking justice and rightful compensation for your injuries, contact us at (305) 760-9085 or 1-800-24-7-CRASH (2727).
Serving the Greater Coral Gables Area, including Miami, Coconut Grove, South Miami, and beyond, we’re here to guide you through the intricate process and help you attain the resolution you rightfully deserve.