can they send her check to the other ins. company? and why are they trying to do that?she works two jobs & really need another car now. please advise

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Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

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UPDATED: Dec 3, 2011

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Insurance Question from Las Vegas, NV

Asked on 12/03/2011

can they send her check to the other ins. company? and why are they trying to do that?she works two jobs & really need another car now. please advise My daughter-in-law had a car accident about 3 wks ago. only her car was involved but the car was totalled. she had two insurance companies. "the Gap" ins. which already her loan off in full. She also had regular car insurance with state farm I believe. they had no problem with sending her a "replacement cost" check so she can get another car. but now 2 wks later they are saying they aren"t gonna send her the check they are sending it to the other ins. co.

Answer given on December 05, 2011

Read your gap insurance policy information carefully.  There may be a subrogation clause in the policy which states that if they pay the car off in full, they will recoup any money from the primary carrier. See below a sample clause from a Gap Insurance Policy. As you can see, in this sample policy language, they only pay the amount AFTER the primary carrier has already paid including deductible. Since your gap insurance paid the claim in full, the primary carrier payment is reimbursement. Your primary carrier (State Farm) probably contacted your leinholder and was informed of the gap insurance’s payment.  The insurance coverage is not designed for put you in a double indeminity situation (paid double). If there is any money left after paying off your loan, you will get any money left.     

The amount we will pay for the Covered Vehicle shall not exceed the lesser of:

The amount shown as the Maximum Limit of Liability on the reverse side of this form; or B.) If the Covered Vehicle is protected by a Primary Carrier; the amount obtained by subtracting the primary insurance settlement including the primary insurance deductible from the Unpaid Net Balance plus the amount of the primary insurance deductible or the amount shown as the Maximum Deductible Buyback on the reverse side of this form, whichever is less: or C.) If the Covered Vehicle is not protected by a Primary Carrier; the amount obtained by subtracting the Actual Cash Value of the Covered Vehicle from the Unpaid Net Balance.  


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