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Car Totaled With No Gap Insurance? What Happens
If a financed car is totaled, insurance pays actual cash value, not the loan. What gap coverage is for, and why you generally cannot add it after the loss.
This short video is a summary of our explainer Car Totaled With No Gap Insurance? What Happens to Your Loan and How Gap Coverage Works, which covers the details, the steps to take, and how auto insurance typically handles it.
Transcript
If your financed car is totaled, your insurer pays the actual cash value minus your deductible, usually to the lender. If you owe more than that, the leftover loan is still yours, and that leftover is what gap coverage is for. You generally cannot buy gap insurance after the loss. Keep making payments until the lender confirms the loan is paid off. You can challenge the valuation if the offer looks low. State rules and contracts vary.
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