Gap Insurance and Georgia Car Crashes, How Does it Work?


When you are in a car accident in Georgia and your car is totaled, if you are “upside down” on your loan you may have to write a big check. As part of my job, I teach my clients that Georgia law provides that a party that damages or destroys property is only responsible for the fair market value of the thing destroyed.

For example: if you own a Ford Fusion and it has a market value of $10,000.00 but you owe $11,000.00 and it is totaled in a car accident in Georgia, the other driver and his insurance company only legally owe you $10,000.00. The gap is $1,000.00 and that comes out of your pocket. The concept is that you were $1,000.00 in the hole while you drove around, it just was not a realized loss yet.

So how do you protect yourself? You buy gap insurance. You can get it through the financing bank or a dealership. It will step in and pay for the gap between the two. Gap coverage applies regardless of whether you caused the crash and your car insurance is paying to total it or if another driver totaled the car.

If you have further questions, call a Georgia insurance lawyer or buy my Car Accident Book.

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