Auto Insurance Claims: forced insurance, bank purchases, auto accident

Question
I was in an auto accident in march, and my insurance had lapsed at the time and i was cited for no proof of insurance and had to pay fines.  I later found out that my bank that carries the loan on my vehicle put insurance on the car during that time.  Since then my loan has defaulted and will soon be repossessed.  The vehicle has never been fixed and I can no longer afford the vehicle.  I am wondering if the bank will be covered for the damages on the vehicle and for any losses if the car is deemed totaled.  Also what will i be responsible for?

Answer
Hi Patrice,

What you are referring to is called "lenders single interest" insurance. This is where the bank purchases insurance to protect their interest in the vehicle. It will pay to repair the vehicle if it is repo'd or will pay off the loan if it is totaled. To be totaled, the cost of the repairs would have to be more than 70% of the value of the car. If the car is repaired it will then be sold. The bank will then likely come after you for any difference between what you owed on the car and what they were able to sell it for.

I hope this helps
Richard Hixenbaugh