Totaled car and ACV less than loan payoff

by Mike
(Colorado)

My car appears to be totaled, and the actual cash value is likely to be less than the payoff amount on the loan. Your discussion of Lienholder's Financial Responsibility clause implies that any difference would be settled from my Liability coverage. I am reading that correctly?

Your website is an excellent resource, the best I've found, and will help "make me whole" again. Thanks.

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Totaled car and ACV less than loan payoff

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Dec 12, 2007

Answer
by: Hector

Hi Mike, thank your for the compliment.
The financial responsibility clause basically protects the lien holder of the car. It simply makes the carrier pay the lien holder or bank first (after any deductible is taken). If there is any excess (between the ACV and the Loan amount), then you would receive the surplus money. If they don’t pay the loan but pay you first, they might have to pay the claim twice (but they would try to get the original money from you).

If there ACV is less than the loan amount, then they would get a letter of Guarantee from the back to release the title of the car, but not you. The loan would still needs to be paid by you (you would be upside down in the loan).

We have review the Financial Responsibility pages and we are not being very clear. We are sorry about that. We will correct the mistakes there.
Hopefully this clears it up.