Wednesday, September 23, 2009
Help Me Howard: Gap Insurance
You buy a new car and wreck it a month or two later, did you know your car insurance won't pay for the entire amount you might owe the bank? That's why some people have what's called Gap Insurance to cover the difference, but what happens if neither insurance company will cover you? It's why a South Florida woman called Help Me Howard with Patrick Fraser.
WSVN -- Terri Polk lives in the Keys and has the same problem everyone does, trying to pick one reason why she loves it here.
Terri Polk: "Just the weather, the outdoors, the water, the boat."
People in the Keys have another thing in common, they all have to use U.S. 1.
Terri Polk: "So he was pinned in the car and stuck in the car, so we had to wait for paramedics to get there."
Terri's car was totaled, her husband was lucky to survive.
Terri Polk: "So that is like the most sturdiest part of the car. If it had been like inches back, my husband might not be here today, so looking at these pictures gets very emotional for me."
But her emotion would soon turn to frustration because the Polks still owed the bank $9,000 on their car loan.
Terri Polk: "Most of the time, car insurance companies do not pay the full value of the loan off."
Terri was not worried, she had paid the dealer $599 for what is called Gap Insurance.
Howard Finkelstein: "If you buy a new car, within a couple of months its loses about a quarter of its value, and if you total it, your car insurance will only cover that amount. Since you still owe the bank almost the full amount of the loan, gap insurance covers that for you."
With Terri owing $9,000 to the bank her auto insurance, paid $5,500, so she asked her gap company to pay the remaining $3,500 on the car loan.
Terri Polk: "And then I got a letter in the mail saying it was denied."
The letter was complicated, but the bottom line, gap says her car insurance should have paid more. Her car insurance says, no, gap should cover the difference.
Terri Polk: "So I am getting two different stories, conflicting stories that nobody wants to pay the extra $3,500 that I owe today on it."
She bought two policies to cover her, in case her car was totaled, and neither is covering her.
Terri Polk: "So, now I have $3,500 I still owe on a car that is totaled, undrivable. You can't do anything to it, and I owe $3,500. It's insane."
Well, Howard, you have looked at the polices. Is it insane, or is there a sensible explanation?
Howard Finkelstein: "Between the two insurance companies, Terri should be covered. The problem here is the insurance have to agree on the value of the car. They do not. If the insurance companies cannot work it out, Terri might have to take them to court."
First, I contacted the Gap company, they said the auto insurance company had used the wrong value for the car and should have paid much more. The car insurance company has agreed to look into the claim to make sure it's taken care of. I then contacted the state agency which oversees insurance companies.
Terri has filed a complaint, and the state is now reviewing it.
Terri Polk: "I never realized insurance companies did this."
With the state involved, Howard thinks Terri will get her money. That's her second big break, the first, surviving the accident.
Terri Polk: "And here is my angel. I have my angel my aunt gave me on my rear view mirror, and I believe what brought us through the accident was my angel."
Patrick Fraser: "Terri bought a new car, guess what? She did not buy gap insurance. To avoid having your gap and auto insurance point the finger of responsibility at each other, buy your gap insurance from your auto insurance company. That takes away any finger pointing."
Facing a big gap between your problem and your solution? Want to insure it gets better? Contact us, our policy is very clear: We will do our best to help you.