Questions & answers · Car insurance
In New Jersey, my car is a total loss and I still owe a loan. Will the other driver's insurer pay off the loan?
Car insurancePaid too littleNew JerseyChecked Nov 5, 2026
From K.Actuary, founded by Sangmin Kwon, ASA · sources checked 2026-11-05 · Source: New Jersey Department of Banking and Insurance (NJDOBI) View original ↗
In short
- New Jersey's insurance department says the insurer is only required to pay the actual cash value of the car.
- If the car is worth less than the loan, you are still responsible for the difference.
- The page does not say anything about gap insurance.
What this means
This answer uses one New Jersey Department of Banking and Insurance page. The page asks whether the insurer has to pay off your car loan and answers no. The insurer is only required to pay the actual cash value, which the page defines as the amount your vehicle would have sold for on the date of the accident. If your car's value is less than the loan, you are still responsible for the difference.
The page does not mention gap insurance, so the sources do not say whether a gap policy would help in your case. Read your loan papers and any gap policy for that.
Your next step
Ask your lender for the loan payoff amount and compare it with the insurer's value offer. Check whether you bought gap coverage. The page gives no deadline.
Check it yourself
Open the NJDOBI page and read question 21 and the definition of actual cash value in question 11.
Where this comes from (1)
[1] New Jersey Department of Banking and Insurance (NJDOBI) · checked 2026-11-05
No. The insurer is only required to pay the actual cash value of the vehicle. If your car's value is less than the loan, you are still responsible for the difference. … Actual cash value is the amount your vehicle would have sold for on the date of the accident.
How we found this
We matched your question to 1 official source, quoted the exact lines, and re-checked each quote against its source on 2026-11-05.
What we don’t know yet
Your own plan or notice may say something different. If your letter cites another rule, send it and we will look again.
Every answer is checked against the official rule it quotes.
Information only — not legal advice. Your plan, insurer or agency decides.
This answer quotes the official sources listed above, with the date we checked them. Your own policy, notice and state rules control. We are not your lawyer or your insurer. We don’t file, argue or negotiate claims for you — you send any letter or form yourself.
Related answers
- My insurer offered $8,000 for my totaled car but Kelley Blue Book says $12,000. What can I do?
- How long do I have to dispute an auto total-loss settlement, and what is the appraisal process?
- The at-fault driver's insurer paid my claim but not the full repair cost. Can I get the rest?
- They totaled my car. How is the amount set, can I keep the car, and what happens to the title?
Answer id CQ3052. Spotted an error? Tell us.