What are my rights regarding insurance coverage for a car that was totaled in a flood?

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What are my rights regarding insurance coverage for a car that was totaled in a flood?

My insurance company paid the market value and GAP picked up the rest. The lender applied the payoff to a payment, staying they can apply it however they want. This leaves us with a balance on a totaled vehicle. Is this legal? Do we have to pay?

Asked on January 13, 2016 under Insurance Law, New Jersey

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 8 years ago | Contributor

If the car is totalled, they can't apply the proceeds of insurance to future payments. But if there was a current outstanding payment (one that had come due, but had not yet been paid) or past due payments, they could apply proceeds to that, then the balance of the proceeds to the remaining amount owed under the loan.


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