Car accidents are always terrifying and traumatic, and the accident claim process afterward can quickly become exasperating due to Washington’s meticulous requirements under fault-based injury law. In many cases, consulting an experienced Lake Stevens car accident lawyer early in the process can help protect your rights and ensure you pursue all available sources of compensation. But sometimes the distress is compounded by discovering that the at-fault party’s insurance only covers the current market value of your car, which may be significantly less than the amount you owe on your now-totaled vehicle.
What Is Gap insurance, and how does it help?
The Washington Office of the Insurance Commissioner states the following:
“Gap coverage pays the difference between what you owe on your loan or lease for a vehicle and its actual cash value.”
What If the Car Accident Wasn’t My Fault?
Unlike the handful of no-fault accident states, Washington has fault-based accident laws under a pure comparative negligence system. This system requires a car accident injury victim to prove the at-fault party’s liability for their damages, like property damage to their vehicle, medical expenses, lost wages, and compensation for pain and suffering.
When your car accident was caused by someone else, you recover compensation from the at-fault party’s insurance company. Just because the other person was at fault does not mean that you automatically recover the full value of your losses, including the remainder of your car loan for a totaled vehicle.
A trusted car accident lawyer may seek the policy limits in your Washington car accident claim, but the amount you recover is limited by the coverage available in the at-fault party’s insurance company. Unfortunately, this may not be enough to cover the remainder of your vehicle loan, since the insurance company only pays the car’s current market value. This amount is based on an insurance company’s assessment of the actual cash value of a totaled vehicle or the diminished value of a vehicle with an accident history. Typically, this is the Kelley Blue Book value of the car at the time of the accident.
When Should You Consider Adding Gap Insurance?
Totaling a car does not erase the amount you owe on your car loan. Unfortunately, a new car’s value begins depreciating the moment you drive it away from the car lot. When you purchase a car with 60 or more months of financing and 20% or less down on the purchase price, then, within one year of purchase for most vehicles, the state’s minimum insurance coverage requirement is not enough to cover the gap between the car’s Blue Book value and the amount you owe on the vehicle if you have a car accident. This is when having an optional gap insurance policy highly benefits you.
Gap insurance covers the discrepancy between what the at-fault party’s insurance will pay for your damaged or totaled vehicle and the amount you still owe on your car, regardless of who caused the accident.
Valuable gap coverage adds a small amount to your car insurance premiums, but can save you from being left paying monthly car payments on a totaled car that you can no longer use or sell.
Does My Gap Insurance Cover Another Vehicle If I’m At Fault for a Washington Car Accident?
Gap insurance only pays claims from the policyholder. It does not cover another party’s losses after an accident, even if the policyholder was at fault for the accident. The other party can only recover the car’s current assessed value from your auto insurance, as well as the compensation available for their medical expenses, lost wages, pain, and suffering. To receive compensation for the discrepancy between what your insurance pays for the totaled vehicle and the amount they still owe for the damaged car, the accident victim would have to have their own gap insurance coverage to file a claim against. If you have questions about insurance coverage after a car accident in Lake Stevens or are struggling to recover the compensation you deserve, consult a car accident attorney from Wells Trumbull to review your case and explain your legal options.