You may not "feel" you want to pay, but that is exactly what you agreed to do and exactly the risk you took in not getting the appropriate insurance. Why should your lender not get what is owed because of an event that did not involve them? The insurance company getting the car has absolutely nothing to do with the lender's right to be paid as you agreed. All of your responsibilities should have been understood by you before you even signed the loan documents to get the car.

Maybe you should have spoken with a lawyer before you talked to the insurance company?

I know they gave you "pain and suffering" but apparently, you didn't protect yourself since you didn't have the foresight to see that you would still be on the hook for the remaining balance owed to the lender.

Now pay the price for not hiring a lawyer. Have fun! Next time speak to a lawyer ASAP and not the garbage insurance company.

You screwed up horribly in representing yourself and got screwed badly by the insurer. Your post is why you must get a lawyer for these cases. There are no do-overs in law. You don't get to retry your case because you now realize you should have had a lawyer.

I will list your mistakes not to help you but so others won't repeat them:

(1) If you are going to be upside down on a car loan, spend the tiny amount gap insurance costs. Since you decided to be cheap and save at most a few hundred dollars, you lost $4300.

(2) The moment you have an accident with personal injuries, retain a lawyer and do not talk direct to the insurer. Study after study shows that people get larger pain and suffering and medical settlements that way. And while a lawyer couldn't have solved your gap insurance problem, he would have warned you, and the added damages you possibly would have won might have helped with that property settlement loss.

Every insurer is in business to pay as little as they can on claims. They will rip you off if you let them. You let them and learned a very expensive lesson.

I do thank you for posting, as your lesson will save other people some money.

BTW, while your seller may not have offered gap insurance, many car insurers do. So if you had taken time to check, it would likely have been available.