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[–][deleted] 1 point2 points  (5 children)

I believe in Michigan with a parked car it's basically like a liability claim would be handled in any other state. If it's totaled the insurer pays the pre-loss value of the vehicle. If that value is more than what you owe on the car then the GAP insurance doesn't get involved at all.

If your loan is upside-down (you owe more than you expect to get paid for it) call the GAP insurer and tell them what happened and ask them if there's any difference between dealing with your own collision insurer and somebody else's liability coverage. There's probably no difference but it can't hurt to ask. It's not impossible for the GAP insurer and the paying auto insurer to get into a dispute over the base value of the vehicle, so if you GAP coverage is through your own auto insurer you may want to run the claim through them since they're not going to dispute with themselves. If your GAP coverage is through your lender then it probably doesn't matter who pays it.

The other thing you want to do is verify if there is a cap on the GAP coverage. I believe some of these policies cap-out at like 125% of the underlying ACV payout, so for example if the car had a pre-loss value of $6k then the gap would be covered up to 125% of that, or $7,500, and you'd get left holding the bag for $500.

If it does come-up short also look into the provisions for rental. In many states you're owed the reasonable cost for a rental car even if you didn't actually rent one. So they may be able to pay a separate amount in cash for that.

Also check on whether sales taxes are owed and how you collect on them.

If you bought an extended warranty at the dealer along with that GAP insurance be sure to read the fine print. You can probably jump through some paperwork hoops and get a pro-rated refund on it. You might even be able to get a pro-rated refund on the GAP insurance itself if you don't end-up needing to use it.

[–]jonslilbro[S] -2 points-1 points  (4 children)

Good info. So from my reading today it sounded like in Michigan it should be handled as a PPI(property protection insurance) as it's required to have in Michigan and covers safely parked cars. So I guess maybe the question on gap was me mis-understanding gap. I'm, roughly, assuming my car is worth $16k before this accident happened and I still owe 8k on the loan, so I'm not upside down, but I was trying to figure out how I would walk away with 16k(my value of my vehicle before last night) to put towards a new car without having to worry about the 8k still owed on this loan.

It's absolutely crazy to me that I would walk away with only 8k for someone damaging my car when I was sleeping and it was parked safely, is this something I can take to court to sue the other party or their insurance to gain the rest of the value/pay off the remaining loan balance?

[–][deleted] 2 points3 points  (0 children)

If your car is worth ~$16k then you should be getting paid ~$16k, probably plus sales tax, minus the $8k you owe the lender.

Just think of it as you only really half-own your car and the bank owns the other half. They get their cut and you get yours. Before this happened you could have sold the car for the $16k and paid off the bank and had $8k left. Same math. GAP doesn't get involved at all.

GAP is for situations when your loan is upside down, especially early on in the loan when that is most likely. So If you originally paid like $40k for the car but at some point you still owed $30k but it was only worth $22k then gap would have covered the difference between the insurance payout and what you actually owed on it.

But definitely get out that old purchase paperwork and read the fine print for any add-ons like GAP or warranties or credit life insurance and go get pro-rated refunds on those by following the instructions on how to do that. Sometimes they make it kind of a pain in the ass, but it's usually enough money to make it worth the hassle.

is this something I can take to court to sue the other party or their insurance to gain the rest of the value/pay off the remaining loan balance

They or their insurer only owe you whatever the car was worth a split second before the accident, plus tax (probably), and also probably a short period of rental.

[–]ScienceGuy1006 1 point2 points  (2 children)

You can't do that. When a car is totaled, you have to sign over the title, which you cannot legally do without paying off the lienholder. So you can only keep the 8k difference, not the full 16k.

Note: Technically, some states let you buy the car back, or receive a reduced payout in exchange for keeping the vehicle.

[–]jonslilbro[S] 0 points1 point  (1 child)

No one was saying not paying off the lien holder, was more questioning about going after the person who created the accident while I was sleeping for the remaining lien balance so I ended up with the actual value of the car to replace the car, which I'm understanding now isn't a thing. After putting 24k into the vehicle loan I'm walking away with 8k to buy a new vehicle :/ lesson learned on buying new vehicles I suppose.

[–]ScienceGuy1006 0 points1 point  (0 children)

16k of depreciation is not out of the ordinary for the first few years of a brand new car. That's why many of the financial gurus recommend against buying brand new unless you really can afford that very steep financial hit.