Video Transcript
When you settle your insurance claim, the check doesn’t necessarily go straight to you. If you handle the case without a lawyer, the insurance company will issue the checks. First, they will issue payment to all medical providers and any other claims they feel they need to pay out of your settlement. Only then will they send a check to you. However, if you hire a lawyer or you hire us, we will determine with you what bills need to be paid out of that settlement. We will determine what medical bills are paid and how much. We will also determine what other claims will be paid out of the settlement, and then we will send a check directly to you.
If there is any money left over after the pay-off, the insurance company will write you a check for the difference. Sometimes the check from the insurance company will have your name and the name of the finance company on it. You may have to sign it over to the finance company. The finance company will pay off the loan and refund the difference, if any, to you as your equity in the vehicle.
Gap Insurance and Repair Coverage Options
If the pay-off on the loan is greater than the check from the insurance company then the finance company gets the entire check and you may still owe the difference unless you had purchased gap insurance. (Gap insurance is insurance you purchase when you buy the vehicle. It is sometimes required by lessors for leased vehicles and sometimes provided in financed purchases.
In addition to gap insurance, another type of optional insurance you might have purchased is repair or replacement coverage, which provides that if your vehicle is damaged, your automobile insurance company will pay either the reasonable cost of repairs or the cost of a new auto, whichever is less.
Substitution of Collateral for Upside-Down Loans
Generally, if you are upside down on a vehicle (in other words, you owe more than it is worth) you would normally be at a standstill. If this situation arises, you can ask the dealer where you purchased your vehicle if he would be willing to do a substitution of collateral, where you simply substitute the new vehicle for the original damaged vehicle on the same loan.
In a substitution of collateral, the insurance company sends the check for the FMV to the finance company, which in turn sends the Title to the liability insurance company and transfers what you owe on your vehicle to a new loan on another vehicle selected by you and the dealer. This procedure allows you to settle the property damage claim as well as provide you with a replacement vehicle.
When using substitution of collateral, you usually will not be required to make another down payment on the subsequent vehicle, though you will usually be required to purchase it from the same dealer because they must agree to the substitution of collateral procedure.
Contact a Personal Injury Lawyer from Riddle & Riddle Injury Lawyers for Help Today
For more information, please contact Riddle & Riddle Injury Lawyers to schedule a free consultation with a personal injury lawyer in North Carolina today. We have twelve convenient locations in North Carolina, including Greenville, Raleigh, Goldsboro, Jacksonville, Kinston, Charlotte, Greensboro, Durham, Fayetteville, Wilmington, Winston-Salem & Garner.
