What if your car was totaled and accident was not your fault but you don’t get enough to pay off your car loan?

UPDATED: Sep 30, 2022

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What if your car was totaled and accident was not your fault but you don’t get enough to pay off your car loan?

My daughter was slowing down on the expressway and someone hit her from behind. She had mentioned police described her as a distracted driver. My daughter did not have GAP insurance and her car was deemed totaled. Insurance did not give enough to pay what’s left of her car loan. A tow truck was called by the police and they charged excessive amount to tow her car. Now she has no car and still car payments when she was at no fault for this accident. What could be done if anything?

Asked on November 5, 2016 under Accident Law, New York


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 6 years ago | Contributor

She might be mostly out of luck, unfortunately. When your car is destroyed, then unless you have GAP insurance, the most you are entilted to for the car is its then current fair market, or blue book, value--i.e. what it was worth at the moment of the accident, given its make, model, year, mileage, etc. That amount is almost always less--often much less--than the remaining payments on a car loan, due to depreciation. If she received the then-current value of the car, that's all she can get for the car: she can't for any more than that. This why people with car loans should buy GAP insurance: specifically to protect them in this situation.
She may be able to sue the at-fault driver for any other out-of-pocket costs or losses not covered or paid by insurance, such as the towing costs and possibly her deducible. Depending on how much this totals to, suing in small claims court, as her own attorney ("pro se") may be a good option, so as to reduce legal costs.

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