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PIOG Car Insurance, what a joke!
April 8, 2009 at 5:44 PM

 My husband has full coverage on our only vehicle through State Farm. He has only had the car for about a year and is currently making payments on it and is not behind and never has been. He still owes 9 thousand on the car. We recently had a bad hail storm and today he had the damaged assessed because he had made a claim on the hail damage. The damage is pretty bad and they ended up telling him that it would cost more to fix the car then what it was actually worth after they calculated its blue book value and what the damage was worth. They told him that they would give him 3,000 dollars (but to the company he is financing it from) and then they would just total the car. BUT that would leave us with a 6,000 dollar debt and no car. We can choose not to do so- but now our insurance is basically crap with them because if anything else were to happen- say a wreck and so forth... we are going to be back in the same boat. I am highly pissed off. I dont understand this at all. The previous insurance company we had (on a previous car) gave us the check when we were buying a different car from the same company. Can anyone help me make sense of this? Should we switch insuance companies.. has anyone went through this- or heard of this?


  • Rachel315
    April 8, 2009 at 5:51 PM


  • themacs4
    April 8, 2009 at 5:52 PM

    That sucks!!  I'm sorry!!  Do you have gap insurance?

  • ChristineSellsT
    April 8, 2009 at 5:56 PM

    Wow it sounds like you are awfully upside down in the car. BUT, we had a bad hail storm here  a year or two ago and we did the PDR repair and it was waaaaay cheaper. Call around and get quotes yourself. If you can find them cheaper than the $3000 than they may be willing to fix it. Our Chrysler Pacifica was completely covered with dents and it only costs us $500.00

    And as far as changing insurance companies they'll want to see pics of the car and will either deny or not cover hail damage.

  • Seans_mommy123
    April 8, 2009 at 5:59 PM

    If they are totalling the car they are giving the money to company he is financing through because they have a lien on the car. Even if you total the car in an accident you still have to pay off what is owed on the car. Is the damage from the hail preventing the car from being driven or is it more of a cosmetic thing? If its cosmetic i'd just deal with the damage.

  • DezmondMommy
    April 8, 2009 at 6:03 PM

    Hi yes I have heard of this ... it happen to me about 5 years ago ... my car was total someone hit me from behind ... the person's insurance was horrible and were delaying the process so i filed through my insurance company...the value of my car was less than what it would cost to fix... so I had to pay the difference on what was left on my loan.. it was only 300 though .. .. but when you purchase a car they have an option to purchase gap insurance or if your car is new when you buy you can get through insurance company... it basically pays off  what is left of your loan balance after the insurance company pays in case anything like this happens...

  • AMarineLovesMe
    April 8, 2009 at 6:05 PM

    I had an insurance company like that, which is why I had gap insurance.

  • dragonfly24
    April 8, 2009 at 6:07 PM

    I have gap insurance on my car to prevent just that. Its a certified used so we purchased our gap insurance through the dealership.  Im not sure what you can do now.

  • mom2ljh
    by mom2ljh
    April 8, 2009 at 6:08 PM

    It is because you likely don't have gap insurance.  Its not part of your normal insurance, thus must be purchased seperately.  Basically, it is what the name implies.  It covers the gap between what the vehicle is worth and what you owe.  I'm sorry you're in such a position now.  Whenever buying a vehicle in the future, you might want to seriously consider gap insurance, or going with All State to get their New Car Replacement (but you have to qualify for that).

  • SusanD
    by SusanD
    April 8, 2009 at 6:09 PM

    I'm going to be honest, its not State Farm being a bad insurance company. This is the standard. Regardless of what you finance a vehicle for, that isn't always the value of the vehicle. That value changes on a regular basis. Here are a few scenarios that would have a person in your situation.

    If your car, when purchased was worth 5,000.00 (kelly blue book value), and you paid 7,000.00 for it...then you are automatically upside down on the value of the vehicle.

    If you purchase a car for 7,000.00 and it is worth exactly 7,000.00 and your payments are 400.00 per month and you have a 20% interest rate, and most of the 400.00 is going towards interest then the value of your car goes down much more quickly than the amount owed on the car itself.

    If you purchase a car worth 7,000 and you pay 7,000 but then you drive it out of town constantly and the average mileage on a car of that make and model is 40,000 miles, but your car has 70,000 miles on it....then the value of your car is going to be lower than the average value of that car, and so it would have depreciated faster because of the mileage.

    I hope that this makes some sense. The insurance company will only pay what a vehicle is worth, and not what is owed for several reasons. The main ones being that if someone has either paid too much for a car (over the value) or if the person has bad/no credit and a high interest rate, they aren't going to pay for that. That is your responsibility. They are also not going to be responsible for what is owed on a vehicle that someone has driven to point of dropping in value considerably. The only way that they will is if you have what is called gap insurance. I don't know if gap insurance is available on used cars or cars over a certain age though.

  • SusanD
    by SusanD
    April 8, 2009 at 6:19 PM

    Many people do not realize when they buy a new car (or even many used cars) what the true value of that car is. Once that new car has some miles on it, the value drops and many people do not check the blue book value of used cars when they are at the lot. Unless you get an honest deal on a used car, a good deal on either a new/used car, or put more than the cost of TT&L down when buying the car...then you are likely going to be upside down and may need to consider buying gap insurance. I personally do not have gap insurance on my car.

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