What should I do if my insurance lied about what should I be getting if I use my car as a collateral and got wrecked? 6 Answers as of March 07, 2014

I have a loan with a finance company and my car was collateral. My car was totaled a month after having the loan, my insurance deductible was $2,500 and my car was only valued at $3,000 so the loan company was only sent $500, therefore I still owe $3000 on a secured loan with no collateral. Before getting the loan I asked questions about what would happen if car was wrecked or broke down and they said insurance would cover it and loan would be paid off. The day I signed my paperwork and the lady was reading over everything, she went over (in a very quick confusing manner) all the insurance I had through them and I was under the impression she once again said this insurance here is what will come in if something happens to your car. When my car was totaled I called to let them know what was going on and asked them how the process worked they acted like they had no idea what I was talking about that they had no insurance out on my car. I have a friend that works at a similar loan company and was told by her that it is a law for the lender to take out insurance on cars when they are used as collateral for these exact issues. I am wondering if my friend is confused or if I am being conned by the finance company because of there mistake of not getting insurance on my car. I can't get any answers from them.

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The Law Office of Darren Aronow, PC
The Law Office of Darren Aronow, PC | Darren Aronow
You always need insurance on a vehicle. And the high deductible is the problem it sounds, which is usually a reflection of your driving record or credit history.
Answer Applies to: New York
Replied: 3/7/2014
Meister & McCracken Law Firm, PLLC | Joanne M. McCracken
As a general rule the person purchasing the car is responsible for insurance coverage in an amount sufficient to pay off the loan. If your purchase agreement says that the finance company is going to provide insurance, then it is responsible. If not, you are responsible. Oral representations mean nothing when it is a contract of that type. YOu may want to speak with an attorney about your options.
Answer Applies to: Arkansas
Replied: 3/6/2014
Patrick W. Currin, Attorney at Law | Patrick Currin
The fact that the collateral for you loan no longer exists does not alter the fact that debt still exists. You are personally liable for it, but now that it is unsecured, this is a debt that can be discharged in bankruptcy.
Answer Applies to: California
Replied: 3/6/2014
Stacy Joel Safion, Esq.
Stacy Joel Safion, Esq. | Stacy Joel Safion
You should have bought gap insurance.
Answer Applies to: California
Replied: 3/6/2014
Fluhr & Moore, LLC | Steven S. Fluhr
In general you are responsible to pay off the loan.? Good news is that the loan is no longer secured.? You will need to review the original paperwork to see if there was additiional insurance which was purchased and should have covered the outstanding loan balance.? If so, then you need to point that out to the lender and insist on making the claim.
Answer Applies to: Missouri
Replied: 3/6/2014
    Edelman, Combs, Latturner & Goodwin, LLC | Daniel A. Edelman
    There is a product called "gap protection" which covers your deductible. If you purchased it, you owe nothing. If it was not purchased, the question is whether the dealer represented that you were getting it. Is there a charge for it in the transaction documents? If there was, you are in good shape.
    Answer Applies to: Illinois
    Replied: 3/6/2014
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