Auto Insurance Claims: totaled car, car insurance companies, lienholder

Question
Hello,

This question is for my sister. Today her fiance totaled her car. She still owes 8,000 on it and her ins company is refusing to pay because they are saying she only had liability insurance. I was informed that You had to have full coverage if you still had a note on the car. Could this be a mistake of the Insurance company and what can we do if it is?

Answer
Hi Amber,

Your sister needs to speak with her agent or review her policy if the vehicle is covered. Secondly, it does not matter what is owed on the car. Insurance companies only pay fair market value.

If ther is coverage and the ins company pays fair market of $4,000, she would be responsible for the balance.

If there is no collision on the vehicle, you sister is out of luck.

I do not know if there is any kind of law stating if a car with a lien has to have insurance, and usually the lienholder will require insurance to protect their interest, but sometimes it doesn't happen.

At any rate, your sister one way or the other will be responsible for the $8,000.

I hope for her sake no one got injured or damage to other property occurred as well.


Rob