Can I demand full payout amount for my bank loan if my car was stolen?

UPDATED: Sep 30, 2022

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Can I demand full payout amount for my bank loan if my car was stolen?

My car was stolen/hijacked and it was financed by a bank. It has been
2 weeks now and my question is if the insurance company will pay off
my bank balance?

Asked on August 26, 2016 under Business Law, Alaska


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 6 years ago | Contributor

The insurer will only pay off your bank balance if you specifically bought insurance that requires them to do so (sometimes, especially in a leasing context, called "gap" insurance). Otherwise, unless you purchased that coverage, if you have theft insurance, your insurance will only pay the then-current fair market, or "blue book," value of the car, which is almost always (due to depreciation) less than the remaining balance owed on the car. That is because as a general matter, unless you buy enhanced coverage, insurance only pays the value of what is stolen or destroyed (which is also all you'd get if you were able to sue the perpetrator).
And, of course, if you don't have theft coverage, it is very unlikely that anything will be paid. Liability coverage, for example, would not cover this loss.

IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

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