What if you get a new car and the unthinkable happens? It gets wrecked within days of you owning it. How does insurance cover you in this scenario? First off, it will matter if the car is brand new, or used. Secondly it is going to depend on the ownership status of the vehicle and whether you have a loan against the vehicle or if you own it outright. Finally, it depends on the insurance coverage that you have on the vehicle itself. That being said: Insurance will compensate you for your loss, as per your policy. Its up to you what to do with that compensation. Your policy will have a deductible that you will be subject to, unless they have another party to file a claim against. So for example if you have a $1000 deductible that means that you are responsible for the first $1000 of the claim and they will pay the rest. So lets say the car had a value of $50,000. That means you would have to pay $1000 while the insurance company pays you $49,000 Who would you have to pay this to? Yourself. You see, if the car was being repaired, you would be responsible for the first $1000 of the repairs. The total cost of repairs is ultimately being paid to the shop to fix the car, youre just paying the first $1000. When the car is a total, you are using the money to buy whatever car you want. So lets say youre going to buy the exact same year, make, model, color, options, etc etc etc. Its going to cost you the exact same $50,000 Well now you pay the first $1000 and insurance cut you a check for the remaining $49,000. Now you have the total you need to buy the car. But you were just compensated for the loss. What you do with that money is up to you. You can buy a different car, a better car, a worse car, or no car at all. Its your money. As for the depreciation of your car, speak to your claim rep and ask them. If the car is leased or financed there is an added complication (because you dont really own the car). In cases of financing here are the possible scenarios: -You owe less than the car is worth. Your lien holder will get the balance remaining on the loan, and youll get the rest. -You owe more than the car is worth. Your lien holder gets the entire settlement, and youre responsible for the remaining balance. If you have gap coverage, this is where it would kick in.
Posted on: Fri, 17 Jan 2014 05:29:43 +0000
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