What happens if my loan was more than my insurance company says my car was worth?

We love our cars. Owning a new car can be one of the most important and satisfying events of our lives. However, in today’s hectic world, car accidents happen and having your car replaced if it is totaled can be an expensive and confusing process. This is especially true if the insurance company says the amount they’ll pay is less than the amount remaining on your car loan leaving you on the hook for hundreds, or even thousands of dollars. So, how does this happen and what can you do to protect yourself financially?

The way this occurs is simple. The insurance company will only cover the actual car value, or ACV, instead of the amount of money owed on the car. For those who own vehicles that are paid for, this is usually fine and allows them to replace their vehicle with a similar one. However, if you have a car loan with a variable interest rate, haven’t maintained your vehicle well or the value of the vehicle has dropped dramatically, the amount paid by your auto insurance may not cover the full loan amount. 

With a GAP insurance policy, you can have the additional fiscal protection to provide the difference between the amount paid by the auto insurance policy and the loan amount. If you have a new car loan, checking with Stromsoe Insurance Agency in the Murrieta, California area can save you more money than you can imagine and eliminate a lot of stress and hassle when it comes to replacing your vehicle due to a car accident. Give them a call today and make sure you have all the car insurance you need, when you need it.

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