car insurance

i'm having a little debate over car insurance with a co-worker, so i'd like some opinions:

1) if a car is totaled, the insurance company covers the cost of what the car is worth at the time it was totaled.

2) if a car is totaled, the insurance company pays off the lease to the dealership. so you lose the money you put as a down payment and have to start from scratch if you want to buy a new car.

which is true??

Re: car insurance

I know for sure that number one is true. Having 2 cars been totaled. It is always minus your deductible.

Re: car insurance

I believe I've heard that about #2

Re: car insurance

i did some research after posting my question:

#2 applies to leased cars.

so i was right! lol

Re: car insurance

#1 is true if you own the car

#2 is true if the car is leased. That's why they sell 'gap' insurance

Re: car insurance

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Posted by geegee827

#1 is true if you own the car

#2 is true if the car is leased. That's why they sell 'gap' insurance

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I believe this is correct.

Re: car insurance

This is unfortunately from experience:
The insurance company gives you how much money it would cost to go and buy the same car you currently have (so it would be used, with equivalent mileage, options, etc). They actually go to dealers and see what the car would cost you to buy.
If you have a lease or the car is still financed, the money goes to that company.
If the amount is more then you owe, you get the 'over payment'. If it is less, you owe that difference. Unless you have gap insurance which would cover the difference in what you owed vs what the insurance company paid for.

Re: car insurance

Remember if you have GAP insurance then it covers the remaining balance.

Example:

If you owe 7000K and the car is worth 4500K then the insurance will only cover 4500K.. If you have gap insurance the insurance will cover all 7k.

Also if you have insurance it will not pay for the downpayment you out down. HTH