What Happens If Your Financed Car is a Total Loss?
If your vehicle is declared a total loss, your insurer will typically pay the Actual Cash Value (ACV) of the car minus your deductible. If your loan balance is higher than the ACV, you may still owe money.
Endorsement 43R / 43S
- If you have Endorsement 43R (Vehicle Replacement), your insurer may replace your car with a new one instead of paying the ACV.
- If you have Endorsement 43E (Depreciation Protection), you may receive the original purchase price instead of the depreciated ACV.
GAP Insurance (Guaranteed Auto Protection)
Some dealerships and lenders offer GAP insurance, which covers the difference between your loan balance and the insurance payout. This can be a lifesaver if you owe more than the car’s value.
Example:
| Original Car MSRP | $40,000 |
| Remaining Loan Balance (Principal pending) | $30,000 |
| Actual Cash Value (ACV) | $25,000 |
| Insurance Deductible | $1,000 |
Depending on Endorsements in your policy, or extra coverages you may have, you may receive or owe money
| Scenario | Insurance Payout | GAP Insurance Coverage | Amount You Owe | Amount You Receive |
|---|---|---|---|---|
| No Extra Coverage | $24,000 (ACV - Deductible) | $0 | $6,000 | $0 |
| With Endorsement 43S | $40,000 (Original Price) | N/A | $0 | $9,000 |
| With GAP Insurance | $24,000 (ACV - Deductible) | $6,000 | $0 | $0 |