Car Insurance, out of pocket despite the accident being the other person's fault

3DPrinter

My wife was involved in an accident that was not her fault and the other driver and insurance company have admitted liability. The damage to our car was extensive and our insurance company wrote the car off. They paid the market rate for the car less my excess and that has gone to try to pay off the outstanding amount left on the car loan. I have contacted the other insurance company and they have agreed to refund the excess. 

The problem is that there is still an outstanding amount left to be paid on the car loan. Both my insurance company and the other party’s insurance company have refused to cover this extra amount. Therefore, I am out of pocket for an accident that was not our fault. This does not seem right.

Can anybody help or offer advice.

mebu60

Are you saying you accepted a settlement amount from your insurer that was less than the outstanding loan amount? By how much? 

What comparisons did you do to satisfy yourself that their offer was the 'market rate'? 

DullGreyGuy

So basically you had a car worth £10,000 and a loan for £12,000 for it which means you were £2k in negative equity. 

They've given you £9,500 for the car, the TPI has paid your £500 excess and so your are now in £2k of negative equity. 

Your position hasn't changed on a net basis which is why they're saying it's not down to them. If you have GAP insurance then it will cover the short fall or put you back to the purchase price depending on what type of GAP you bought.

Aretnap

Indeed. The third party's responsibility is to pay for the value of the property that they have destroyed. That's a fixed sum - it didn't change depending on whether you originally bought the car with cash, with a finance deal, with a bank loan, or whether it was a gift etc.

The way to look at it is that before the accident you had a car worth (say) £10K and a loan that needed paying off. Of the insurer pays you £10K then you are in the same financial position as you were before and not out of pocket  - the loan would still need paying off either way. Having to pay it off earlier than you anticipated might be inconvenient, but it's not a financial loss that you can claim for I'm afraid.

3DPrinter

Thank you everybody for your advice. As everybody says basically the same thing I will have to accept that I am out of pocket when I am not at fault. It doesn't seem right, but if that is the law then there is nothing I can do about it.

prowla

Does the loan allow early termination and reduce the interest accordingly?