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A totaled vehicle that I owe more that its worth

by Chris

I have a 2 part/2 scenario question. My wife got rear ended yesterday. It ripped the tow hitch out of the frame and ripped the fuel tank from underneath, and some bumper damage. The insurance company has accepted liability. However, after speaking with him today, he says that it looks like it will be a total loss (but he has to run the numbers).

The estimates for repair are in the 6K range. KBB estimates the 06 Jeep Grand Cherokee with 65000 miles on it @ $8800 retail value or $6500 private party value.

I owe about $10500 on the Jeep. If its totaled out, and all they will pay is the value of the jeep, am I responsible for the rest of the balance on the car I no longer will have do to know fault of my own. Shouldn't the insurance company be liable for damages, and place me in a position where I was before the accident??????

If not, If I am not protect from this kind of unfortunate incident, can I keep the vehicle. I am an ASE certified Auto Technician, and can fix the vehicle myself, if I must. If it is a total loss, do I get the value of the car paid to myself, then I can fix the car, and continue to make the payments as originally intended???

Thanks for your help.



To your first question, unfortunately, you are responsible for the difference between the total loss and what you owe on your bank. The theory is that the insurance company is not responsible for poorly financed or over priced vehicles. They are supposed to put you back in the situation you were= a vehicle with only $6,500 equity in it.

I know this is very unfair and that you can be faced with paying on a car that you longer have, in a situation where you have no liability at all (or your wife). The best here really is to fight the value of your vehicle and get it up as much as you can out of the settlement, there are different techniques to do that. For more information about total loss, visit:

I also suggest you get this eBook, is cheap and can increase your settlement by quite a bid:

In most states you can keep your car, but the insurance company will deduct the salvage value from the settlement. For example, if they believe your car is worth $2,000 as scraps, they will deduct that from the $6,500 figure, giving you only $4,500. It is a hard call, but if you believe you can fix it, then you can probably keep it an reduce the loan amount by the amount of the settlement.

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