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Ask the Car Insurance Expert

My car was rear-ended and totaled but it was paid out by my insurance company and I am left with a balance on my car. Can I make a claim with the other drivers insurance company to pay the balance?

No, you’re entitled to the actual cash value of your car, not what you owe on your car loan..

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Auto insurance claims settlements are meant to make you whole by putting you financially into the same place as you were before the accident.

Unfortunately, you had negative equity in your vehicle (owed more than it was worth) so being paid its worth the moment before it was crashed may not feel like being made whole.  You ended up with a gap of what the value is and the balance due on your loan, which is your responsibility alone to pay for – unless you have gap insurance.

Gap insurance is additional coverage that you can carry when you owe more than your vehicle is worth and if the car is totaled it will pay the difference between your vehicle’s ACV and your loan balance so you aren’t left still paying on a car you no longer can drive.

Last updated: Jul. 14, 2014
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