This is purely hypothetical; it hasn’t happened to me or anyone I know.
Let’s say Jane owns, free and clear, a 95 Lexus, Blue Book value of $5000. She has comprehensive insurance. On Monday the car is stolen. On Wednesday, she gets a $5000 check from her insurance company. On Thursday, she puts a $5000 down payment on an 05 Lexus. On Friday, the stolen car is found, intact, when the police raid a suspected chop shop.
What of the car now? Is it still legally Jane’s, even though her insurance company has paid the claim on it? Does it belong to the insurance company, who will try to sell it to recoup some of their money?
Let’s say Jane is two years into a five-year loan on an 03 Lexus. She’s paid about $4000 on the principal and still owes about $21000 (I’m using made-up numbers here, so forgive me if my math is convoluted). She has comprehensive insurance.
On Monday the car is stolen. The insurance company will pay off the balance of the loan, but what of Jane’s investment in the principal? Is she compensated for her investment, or is she SOL? And again, what if the car is found intact after the insurance claim is paid?
The one time I made a claim on insurance, this happened to me. It was camera lenses, not a car, but as I recall, I had the option of giving the money back or giving the lenses to the insurance company. I think I sent them the money.
I suppose I also had the option of just not saying anything, but I didn’t choose that one.
Note though, that the situation is worse than you have it pictured because of the deductible. So Jane will likely only get $4K back on a $5K car. So if she puts down a $5K deposit on a new car, $1K of that money is hers.
It’s not legally Jane’s car anymore. The insurance company isn’t going to write a check until she relinquishes claim to the car. Once the claim is settled, the insurance co. owns the car. If Jane hadn’t cashed the check and instead wanted to take her chop-shop-survivor Lexus back, I think the insurance co. would let her, unless the cost of the repair claim was greater than the value of the car. Then they’d tell her they are not going to pay more than the book value, no matter how much it costs to repair it.
For the second scenario, the insurance companies doesn’t pay the remainder of a loan. They pay what the book value is - not what you still owe on the car. If Jane had paid 100% cash for the car when purchasing, they’d pay the book value back - not “zero” because she had already paid for the car. If she only paid $500 down and then owed $24,500 but the car’s book value was only $21,000, the insurance company is only going to pay $21,000 and Jane will be “upside down” on her loan. Meaning, she’ll have to find the remainder of the loan balance and pay it off herself.
In your first case the insurance company owns the car. In some cases, if your car is wrecked, you can keep the wreck and the insurance will settle the value of the car minus the value of the wreck and cut a check to you for that amount. Most people take the full value, but sometimes the wreck can be worth more than what the insurance co. decides.
A friend wrecked his brand new truck. The insurance co. let him keep the wreck which he turned around and sold to someone else for $1000 more then the insurance co. settled with him. He had that kind of luck.
In the second case your friend should consult her policy. If the insurance co. values the car at only $15k then your friend still owes on the loan unless the policy covers the outstanding loan amount.
This is all of course above and beyond your deductable.
My buddy’s Lincoln LHS was stolen awhile ago. If I remember correctly the insurance company did not cut him a check for 60 days. It was between that period that if the car was found he would be obligated to reclaim it; if the cost of repairs/cleaning was lesser than the book value. After the 60 days, he got a check for the full book value. Several weeks later the car was found, however, besides having to go to court and testify that the car was indeed the one stolen from him, he had no obligations.
Pardon me, a little drunk (took the week off, read my previous posts if you’re into soap operas.).
Here’s how it works:
Car is stolen. And police are notified.
Owner notifies insurance company that the car has been stolen, insurance company notifies National Insurance Crime Bureau (NICB) that the car has been stolen. Henceforth, ANY tow company or police department reporting the vehicle’s VIN will know that the car has been reported stolen, and the Insurance company will be notified that the car has been recovered. They ALL report impounds to the NICB for cross checking.
Insurance companies wait about 10 days from the date of the theft before making a settlement–to let the police do their job. If, after this time, the vehicle has not been recovered, the claim is settled as a total loss. Which means the insurance company BUYS the car from the customer. Done deal.
I’ve tried to “undo” a couple Total Thefts" in my day. They are a nightmare for all involved. The title paperwork flow goes one way, so to speak. Only the smallest of companies can pluck a title before it is sent to DMV.
A friend had a car stolen, found a few days later by the police. It was found just a few blocks from where it was taken. Car was in good shape except for a steaming pile of human fecal material on the passenger seat. What followed was comical. The cop told my friend to “get some paper towels and clean it up”. My friend said no way. Several phone calls later, it was decided that hazmat could remove the feces. My friend did not want to deal with the stained/hazardous seat, however. Eventually hazmat removed the feces and put some kind of chemical on the stain. The car was then towed to a garage and the seat replaced.
His insurance paid for this, minus his deductible.
Eeeew! Not just like that, no. But some cars do get stolen and used as mobile meth labs. The chemicals permeate the interior and although the car may be in good shape, it’s undriveable and thus a total. To make matters worse, tow companies won’t move the car because it’s a hazmat thing. So we have to detox the car as much as possible (expensive) and then haul it off to a crusher.
From my old job indexing state insurance laws and regulations, I recall that a policy covering loss of property almost always has a “right of salvage” provision, which simply means that if the insurer pays you for an outright loss, and the property is later recovered in whatever condition, it becomes the insurance company’s property. They can junk it, salvage it for resale, or whatever they want.
