Fair Market Value

If you have ever been in an auto accident it may not come as a surprise to learn that the insurance company of the person who caused the accident may not pay you the amount necessary to pay-off your vehicle, even if it was damaged or totaled in the accident. This does, however, come as a surprise to many people who have never been in an accident before, and find themselves having to deal with an insurance company for the first time. The reason for this is that auto insurance companies are only required to pay what is called the “fair market value” or “actual cash value” for your damaged car. This value may be less than what you actually owe on the car. This is because many auto loans are structured so that during the first couple of years the value of the car depreciates faster than the balance of the loan. The majority of your payments in the first two years of an auto loan go to paying off the interest on the loan. After that, a larger percentage of each payment goes toward paying down the principle of the loan. As this occurs, the market value of the car depreciates. Many times when you drive a new car off the lot, the value of that car depreciates a thousand dollars or more. Even if you owe more money on your car than it is worth at the time of the accident, the insurance company is only required to pay you what the car is worth, and nothing more. To make matters worse, insurance companies often will “low-ball” you when it comes to what the actual fair market value is. One way of insuring yourself against losing a large amount of money if you find yourself in this situation is to purchase GAP Insurance. GAP Insurance covers you for the difference between what you owe on the car and what the car is worth. So if you are involved in an accident and owe more than what your car is worth, paying for GAP Insurance will ensure that you get the difference. Having an attorney assist you in dealing with the insurance company can also help assure that you do indeed get the fair market value for your vehicle and that you are paid for the medical and other related expenses incurred because of your accident. If you have been in an accident call us today!