If a car is deemed a total loss, the at fault person (usually through their insurance company) owes the fair market value of the vehicle plus loss of use. Loss of use is generally a rental car for a reasonable period of time to purchase a new car in the total loss scenario. What happens if the person owes more money on the car that what the car is worth. Generally, the value of the car is the value of the car. Assuming that the parties agree to that value, and this law firm does not see a lot of disagreements about the value of cars, it really does not matter what is owed on the car. The person that damaged the car owes it value, the loss of use and that is it, in terms of property damage (of course, there may also be personal injury!). In theory, the agreed value would be sent to the finance company and the owner would owe the balance of the loan. Oftentimes, finance companies require or people purchase what is known as “gap” insurance. Gap insurance pays the difference between the totaled value of the car and what is owed on the car. So if a car is totaled at $10,000.00 but for some reason there is $15,000.00 owing on the car, then the gap insurance pays that $5,000.00 difference.
There are many reasons that someone may be “upside down” (where what is owing is greater than the value of the car) on a car. First, they may have negotiated a bad deal or in other words over paid for the car. Another reason is that someone may have very bad credit and while they are paying down the loan the car is depreciating quicker than they are paying down the loan. Some people are upside down on one car and they trade it in and roll the debt into another car. There are various reasons that someone may owe more on a car than what it is worth but the law generally entitles you to the value of the car, regardless of what is owed.
If you have been in car accident, please call Drucker Law Offices at 561-483-9199 or 954-755-2120, 305-981-1561, or 561-967-3840 – Principal office in Boca Raton plus satellite offices in Miami, Coral Springs, Boynton Beach, Lake Worth and West Palm Beach. Drucker Law Offices only charges its clients fees and costs if it recovers money for them. Attorney Gary Drucker offers a free consultation in any of the offices referenced above or at your home or in the hospital. Please call the law firm to set an appointment today!
Every case is different and unique and should be judged based on its specific facts. The legal discussion in this blog is intended to be general and should not to be construed as specific advice for a case or more importantly for your case. The goal of the blog is to give some information about a topic and to have you call the law firm for specific advise, if we were to take your case. A minor difference in the facts of the case in a fact pattern such as above could completely change the result. Also, this blog is, as the web site suggests, based on the laws of Florida and the laws of any other states or country could vary drastically from Florida.
