If a car is sold on monthly payments, who is entitled to the insurance proceeds if there is an accident?

Get Legal Help Today

Compare Quotes From Top Companies and Save

secured lock Secured with SHA-256 Encryption

If a car is sold on monthly payments, who is entitled to the insurance proceeds if there is an accident?

I sold my car to my friend. I agreed that she could make monthly payments since she couldn’t pay the whole amount up front. She then got an car accident and totaled the car. Title was still in my name so the insurance company paid me more than the total sale amount; she was paying monthly and had not yet completed full payment. She is claiming that she should get the excess amount on the sale price (I sold her the car for $10K; insurance paid me $12K); she is demanding her monthly payments that she paid me, plus $2000. My understanding is since she never paid in full by the time of the accident the car was considered to be mine.

Asked on December 26, 2011 under Accident Law, California

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 12 years ago | Contributor

It would be legal to do it either way--either transfer the title to buyer immediately, subject to financing and (likely) repossession in the event that payment is not made (this is how most financed car sales through a dealership are done); or to have title transfer only on full payment. From what you describe, with title still in your name, it appears this transaction involoved the second option. In that case, you were still the owner and would seem to be entitled to the insurance payments; however, you would have to refund her all payments she made to date, since the conctract of sale has now been made impossible (you can't provide the car to her, since it was totaled), and when a contract is made impossible, it is voided and each party gets back what it had provided. In this case, she gets her payments back, and you get the car (or in this case, full entitlement to the insurance proceeds). You can't keep the insurance and her payments both.


IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although AttorneyPages.com has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

Get Legal Help Today

Find the right lawyer for your legal issue.

secured lock Secured with SHA-256 Encryption