What Happens If You Crash a Financed Car With Insurance
Have you ever wondered about a situation in which your newly purchased car got highly damaged after a car crash, and you still have pending loan amounts? How can one manage this terrible situation? What to do next? How do you claim in such a situation? Many more questions arise after meeting with such a situation.
But not to worry dear, here the entire article focuses primarily on “What Happens if You Crash a Financed Car With Insurance,” not only that, but here we provide our readers with all the essential information related to financed car, their coverages, and more. Thus, please read the entire article carefully, as the given details may provide you with much more information to cope with the situation efficiently.
What is a Financed Car?
As we said in our introduction paragraph, here, we will provide all the essential details about a financed car, and thus, let’s start with its primary term.
“Financed Car ” means a vehicle you purchased through a financing option; for instance, suppose you are the buyer of the car, and you have taken money from a lender, with an agreement that you will surely pay back the loan over a particular period, including the interest prices.
But here, you must remember that he has a right to hold the car title until you pay the whole amount to the lender.
Types of Insurance-Financed Car Covers:
The financed car coverages provide three coverage options to their policyholders which are;
- Liability Coverage:
As we already know, the Liability Coverage covers all the damages and personal injuries you caused to other people or property.
- Comprehensive Coverage:
This coverage mainly protects you against the damages caused by theft, fire, vandalism, or due to natural disasters.
- Personal Injury Protection:
This coverage’s primary purpose is to pay for the medical expenses and lost wages you and your passengers suffered due to the accident incident.
Several Financing Options Avail for Purchasing a Car:
For those who are new to this article, here we are going to share a few financing options that you can take while purchasing a car, including;
- Financing Via Dealership:
Sometimes, the dealership may offer their clients a financing option on banks or other finance companies.
- Auto Loan from a Bank or Credit Union:
You can also take a car loan from a bank or credit union here.
- Personal Loans:
You all know how personal loans work, right? So this is another financial option you get while buying a car.
What is the Requirement for Insuring a Financed Car
When you finance a car, the lender will need comprehensive cover insurance, including collision insurance. Adding the comprehensive cover here protects the lender’s investment if the vehicle is damaged or totaled while dealing with an accident. On the other hand, most borrowers here demand full coverage insurance, including comprehensive and collision insurance.
So, it is essential to check your policy twice to ensure that you have an appropriate coverage option in your policy when you meet with an accident. Also, a few companies do not use the coverage option to cover the outstanding amount of the loan, so in that period, the policyholders need to pay from their pocket.
Therefore, here we recommend all the readers understand all the financing options, legal requirements, and insurance coverage needed to finance their car.
What Happens If You Crash a Financed Car With Insurance?
We all know that being involved in an accident with a financed car is one of the most stressful situations, and at that time, we must learn which steps to take after we meet with an accident, how to file a claim and more.
Thus, here we are finally sharing with you some of the essential steps that you must follow after getting into a car crash accident with a financed car;
- Step 1: The first step after you meet with an accident is to check yourself and other persons involved for injuries.
- Step 2: You must connect with your nearby police station and share every accident-related detail.
- Step 3: Later, collect all the information, such as insurance information, license plate number, driver’s license number, etc.
- Step 4: Also, you need to share the photographs of the damage to your vehicle.
- Step 5: After collecting enough evidence, you need to connect with your insurance provider and share information about the accident with them; you also need to submit a police report to your insurance provider.
- Step 6: Your insurance provider will send their adjuster team to investigate the accident scenario and the damages caused to your vehicle.
- Step 7: The adjuster here will also determine whether your car needs a repair cost or if it will be completely damaged.
- Step 8: once the investigation is over, your provider offers a settlement amount to you against the financed car repair, or else they will provide you the actual cash value in case the car is damaged.
- Step 9: If you find that the settlement offer given by your provider is good enough, you can accept the order, and the provider will pay for your damages.
Those, as mentioned above, are legal steps everyone needs to follow when filing a crash-financed car claim. On the other hand, you must have all the relevant evidence about your car accident, such as photos, witness statements, etc., which are mandatory here.
What Happens If Your Settlement Amount is Insufficient to Cover Remaining Loan Amount?
We have already learned about the financed car claiming process, right guys? But what if the settlement claim amount the provider offers you is less than your loan amount? How would you manage the remaining amount, and from where? Such a question arises in car owners’ minds when they have yet to pay the entire loan amount.
Thus, here we have a few solutions for it, such as;
- You may negotiate the settlement amount with your provider if the loan amount is more significant.
- The other option is to go for gap insurance, which will lower your financial burden.
- Also, you can explain the accident to the car lender and tell them to modify the loan term.
Final Words:
We are never able to guess the unpredictable moment, right guys? And, it is always better to have an insurance policy on hand, as it protects you and your family from any financial trouble.
In this article, we have shared a critical issue that many of the policyholders face, and that is, what happens if you crash a financed car and have yet to pay the loan amounts? It’s claiming process and more.
So, read the entire article carefully, and if you have yet to buy your car’s insurance policy, connect with your nearby insurance provider as soon as possible.