What Happens If Your Car Gets Totalled and You Still Owe Money?
It is bad enough when the ICBC declares your car a total loss after a crash. It is even worse if you still owe money on the vehicle because the debt does not go away simply because the car is inoperable. While insurance should pay for the replacement value of the car, that replacement value is not necessarily the same amount you owe on the auto. For example, if you owe $15,000 on the car, but the ICBC determines the vehicle is worth just $12,000, you must continue paying for your loan or lease until the $3,000 difference is made up.
The ICBC estimator may not accurately value the vehicle during the post-accident examination. A Vancouver ICBC lawyer at Preszler Injury Lawyers can help you receive the fair value of your car, and negotiate on your behalf with the ICBC.
Understand Your Agreement
Approximately 85 percent of drivers lease or finance their cars, rather than purchase them outright. When leasing or financing a vehicle, understanding the terms of the contract is imperative. Read your agreement carefully before signing, and if you have any questions, ask the lender for clarification. Pay particular attention to the process of repairing a car after an accident, and the contractual limits on the cost of such repairs.
Avoid the scenario of paying the balance on a totalled car by purchasing Guaranteed Auto Protection (GAP) insurance beforehand. It is possible you are already covered by GAP insurance, as many lenders require such protection on leases. If a lender does not require GAP insurance, they will offer it as an option. How much GAP insurance costs on loan length and the amount paid for the vehicle, but it is usually reasonable.
While new car dealers most frequently offer GAP insurance, it is usually available on higher-priced models less than three years old and in good condition. Keep in mind that the minute a new car leaves the dealer’s lot, it depreciates roughly 20 percent in value. Thus, GAP insurance protects you in two ways. If you get into an accident shortly after financing or leasing your vehicle, GAP safeguards against rapid depreciation. It also does not leave drivers at the mercy of an ICBC decision about the totalled car’s value.
Anyone taking out a car loan lasting 60 months or more should especially consider buying GAP coverage. When taking out a loan for five years, the odds of the car’s value and how much you owe remaining relatively close diminish. That also holds true for anyone putting little money down when leasing or financing, or if they drive a great deal. The higher the mileage on a car, the more its value depreciates.
The ICBC considers vehicles totalled when the cost of repairs outweighs the car’s value. This amount is determined by the car’s current market value, based on age and condition, although the salvage value is added to this number. The ICBC bases this amount on the value of similar cars in your area, but the estimate may not reflect particular upgrades made to your vehicle.
If you disagree with the estimated market value, it is your right to receive information on how the ICBC arrived at this number. For example, the estimator may have labelled the car in “average” condition, but you may have documentation, including recent photos, that the vehicle was actually above average. Perhaps the car had major repair work done, increasing its worth.
Contact a Vancouver ICBC lawyer
If your car was deemed a total loss by the ICBC and you feel the value was unfair, contact the ICBC law firm of Preszler Injury Lawyers for a free consultation. Call us 24/7 or contact us online to arrange an appointment. We serve all of British Columbia. Our staff will review your claim and documentation and advise you of your options going forward.