GAP insurance is exactly for this type of situation. There may be more more owing on the finance than the insurance will pay.
However, one would hope that with a two year old car, it's done the heavy depreciation as taking it away as a new car is the biggest loss, and then it progressively gets less. If she didn't pay too much for it, and I guess there was a deposit, and she has paid two months payments, the sum owing on the loan may not exceed the insurance payout.
Best to get a selection of dealer prices now, and tell her to regard the first offer as an opening point for negotiation, and not be too surprised if the offer is increased when one queries, fairly normal practice I believe.
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Insurance Question new
Insurance Question new