Sometimes the cost for repairing a damaged vehicle is greater than some percentage of the vehicle’s value. If that cost were to be greater than 80% of the value, then the insurance would probably refuse to cover the cost of the repairs. In that case, the policyholder would receive a check for the value of the financed vehicle.

Significant feature of check given to policyholder

It would carry the names of both the policyholder and the lien holder. Hence the money from the insurance company must be used to pay off the amount of money that might remain on the lien. Still, there could be times when the amount available for payment to the lien holder could fall below the amount of money required for paying off the entire lien on the damaged vehicle.

If the amount of money available to the lien holder does not cover the size of the payment that is due from the plaintiff, then the plaintiff’s own money must be used to cover a portion of that same debt. Ideally, the plaintiff/policyholder has some money that could be used for that purpose. If not, other actions must be considered.

What actions could a policyholder take, in order to prevent development of such a situation?

Any car owner could arrange for addition of gap insurance to the purchased policy. That ensures coverage of the money needed in order to fill the gap between the amount of money awarded to pay for damages and the amount of money needed, in order to pay off a car loan.

Not all policies carry the gap insurance. Smart car owners study their policy, in order to learn whether or not it does include gap insurance. After all, there is no way to change the loan repayment terms. In other words, the lien could not be forgiven or altered, so that the lien holder owed less money.

It is also possible to get an estimate on repairs from one location, to give that to the insurance company, and then to look for a shop that would be willing to complete the repairs at a lower price. Such an approach would allow the policyholder to pocket some of the money that was supposed to cover the cost of repairs.

Personal Injury Lawyer in St John’s are aware that policyholders do have the right to request a larger payment for a totaled vehicle. However, insurance companies seldom grant such a request, unless the policyholder can offer proof of the fact that the damaged vehicle had a higher value, than the one that it was given by the insurance agency. That fact underscores the reason that it pays to take pictures of any accessory that was placed on an insured vehicle.