Expert: Richard Hixenbaugh - 9/15/2009

Question
My vehicle was hit by someone and his insurance has accepted liability. The vehicle is totaled. We have a loan through the bank. The insurance guy wants to know our payoff value and information from the bank. Does this mean he is planning on writing our check for the amount we owe the bank? My plan was to pay off the bank and then take out a new loan for a new vehicle. But, if insurance only pays off loan, then I've lost what I've already paid right? Shouldn't I get the Kelley Blue Book value? Do I need to tell insurance thats what I want? Am I required to give bank info?

Answer
Hi Beth,

The insurance company is required to pay the local market value of your car. They will do a market search to see what cars like yours are selling for and will make adjustments for differences in mileage, options and condition. Kelly Blue Book is only a guide and their figures tend to be on the high side of reality. You should also research the value of your car by going to www.autotrader.com . There you can search for vehicles like yours. You should stay withing 100 miles of your zip code. Look for vehicles that most closely match yours in mileage, options and condition. If the insurance company offers you less then what you think it should be you can send them the research you found in order to negotiate a better price.

Once you agree on a value, the insurance company is required to pay your lienholder (bank). They are asking you to provide the bank information so they can find out what your payoff amount is. If the value of your car is more than you owe, they will pay off your loan and then send you the difference. If the value is less than you owe, they will pay the entire amount to the bank and you will still owe the difference. This is the required way the claim will be settled.

I hope this helps
Richard Hixenbaugh