Legal Question in Insurance Law in North Carolina

Re: Automobile insurance claim

The conduct of the insurance company seems correct. (We of course have not seen the vehicle, the estimates, the fair market value, the insurance policy, and we do not know the details of the accident.) It sounds like you were "upside down" on your vehicle; i.e., you owed more on the car than it was worth. The insurer is liable only for that amount owing under the policy, which is probably the fair market value. If you default on the loan, then presumably the lender can sue you, and obtain a judgment for the balance (and also probably some costs and attorneys fees). The judgment would generally affect your credit. I am not aware that you would be subject to being placed in jail. (That is known as "debtors prison," which generally does not exist in this country. If, however, you fight with the repo man, that is a different matter.) As a partial aside, this is one of many financial risks of buying some cars, especially a new car. When the car is driven off the lot, it usually sustains a significant diminution in value. For that reason, a used car is of course a better economic alternative. The accident you had simply hastened your realization of the economic loss which you probably sustained at the time of purchase.