Auto Insurance Claims: Gap insurance, private health insurance, gap insurance

Question
Greetings my question is how does gap insurance work? I mean I understand it pays for the remaining balance of what your auto insurance leaves but in a situation whereas a car cost 13,000 and the insurance pays 12,000 the gap pays the 1000 balance correct? so how does the insured get money for a replacement vehicle? I have that problem where my car may be a total loss and I was injuried in the accident as well the other driver was at fault could I use the money from the personal injury side of my case to get a replacement car.

Answer
Hi Michael,

Your explanation of how GAP insurance works is correct. In the scenario you gave there would be no extra money to replace the car. The idea is that with your loan paid off, you should be able to go finance another car. As far as using injury money for a car, you can do that, but, you need to keep in mind that depending on the extent of your injuries, a settlement may take weeks to months. The insurance company will not even discuss a settlement until all of your treatment is completed. If there is no treatment then the settlement will not be very large. If you did seek any treatment and your private health insurance paid the bills, they will have to be reimbursed out of any settlement you receive.

I hope this helps
Richard Hixenbaugh