Can I demand full payout amount for my bank loan if my car was stolen?
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Can I demand full payout amount for my bank loan if my car was stolen?
My car was stolen/hijacked and it was financed by a bank. It has been
2 weeks now and my question is if the insurance company will pay off
my bank balance?
Asked on August 26, 2016 under Business Law, Alaska
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 8 years ago | Contributor
The insurer will only pay off your bank balance if you specifically bought insurance that requires them to do so (sometimes, especially in a leasing context, called "gap" insurance). Otherwise, unless you purchased that coverage, if you have theft insurance, your insurance will only pay the then-current fair market, or "blue book," value of the car, which is almost always (due to depreciation) less than the remaining balance owed on the car. That is because as a general matter, unless you buy enhanced coverage, insurance only pays the value of what is stolen or destroyed (which is also all you'd get if you were able to sue the perpetrator).
And, of course, if you don't have theft coverage, it is very unlikely that anything will be paid. Liability coverage, for example, would not cover this loss.
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