Insurance only covers payoff, when not your fault

My daughter was rear ended in our new car 3 months. The car was totaled. The insurance company says they only cover the pay off. Is there no way to get the money we used as a down payment. I can’t believe when it was another driver’s fault we are out over $3,000.

Asked on September 21, 2017 under Accident Law, Florida


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 3 years ago | Contributor

Your insurance policy is a contract: you have that coverage--and only that coverage--you purchased. So if you have insurance coverage only for payoff, you cannot recover the downpayment. There are other coverages you could have bought--some have "new car replacement" for example--but if you did not get them, you have no recourse to insurance.
The maximum you can get in an accident from the at-fault driver is then-current fair market or blue book value of the car: what it was worth at the moment it was totalled. Anything you get from insurance, including to pay off the lease or financing you were responsible for, is an offset against that. If the value of your car when it was totalled exceeded the payoff amount, you could sue the other driver for the difference.

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