If you get in a car accident in Albuquerque while driving a leased vehicle or one paid for with a loan, you can encounter difficulties trying to cover the full amount that you still owe. There is likely a difference between the compensation you receive for the actual value of the vehicle and your remaining balance on the car lease or loan. Gap insurance is a solution that can cover this difference.
What Is Gap Insurance?
Guaranteed asset protection (GAP) insurance is a type of first-party automobile insurance that can be purchased to cover a leased or financed vehicle. It protects you in the event of a gap between what you still owe on the vehicle’s lease or loan agreement and the actual value of the car.
Since new cars immediately depreciate in value upon being driven off the lot, there is often a difference of at least a few thousand dollars between the amount still owed by the driver of the vehicle and how much it’s currently worth on the market. If you have gap insurance, it will cover this difference so that you are not left to pay it out of pocket.
For example, if you have a remaining balance of $20,000 on a vehicle loan when you get into a car accident that totals the car (meaning it is a total loss, or worth less than the cost of repairs) but the insurance company places its pre-crash value at $15,000 due to depreciation, you would still owe the $5,000 difference. Gap insurance can pay for this type of loss.
How to File a Gap Insurance Claim in New Mexico
After a car accident in New Mexico, liability will need to be determined by investigators. The liable party is the one assigned legal and financial responsibility for the crash. Under New Mexico’s fault law, liability goes to the driver or party at fault for the accident.
If another driver caused the damage to your loaned or leased vehicle, that driver’s automobile insurance can cover losses such as your medical bills and property repairs. If you’re left with a difference between your outstanding balance and what the insurance company is offering, however, you will have to contact your own car insurance company for additional coverage.
Ask about your policy and whether you have gap coverage available to pay the difference. You may or may not have to pay a deductible to access your gap coverage. If there is a deductible on your plan, you can potentially list this cost as a recoverable expense in your property damage claim against the at-fault driver.
Gap Insurance vs. an Injury Claim
A gap insurance claim is not the same thing as an injury claim for a New Mexico car accident. Gap insurance does not pay for medical bills, lost wages or property repairs. You will need to file two separate claims for full coverage. Your injury claim will be filed against the party that caused your accident, while gap insurance is something your own auto policy provides.
When to Contact a Car Accident Attorney
If you are involved in a car accident that is serious enough to total your leased or loaned vehicle, it is generally in your best interest to consult with an attorney about your legal case. At the Fine Law Firm, a lawyer can guide you to the correct next steps and help you understand your rights in terms of making a full financial recovery.
If necessary, your lawyer can represent you during talks with insurance claims adjusters to negotiate a fair settlement. This includes taking over communications with your own insurance provider regarding gap insurance coverage. For more information about gap insurance claims in connection with a recent car accident, contact us today for a free consultation.