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by em17henry on December 5th, 2005

em17henry

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Would my financing company find out if I didn't get full auto insurance coverage?

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Answers. 3 helpful answers below.

  • by andywho on December 6th, 2005

    andywho

    Yes you must have full coverage to replace the value of your car. Different financing companies require a minimum detuctible. Why expose yourself? If anything happens to your car you are still resonsiple to pay them back. Most dealerships will not let you leave the lot without proof of full coverage. If you do not have coverage the dealership is on the hook. The insurance company can leaglly sue the dealership if they cannot prevail against the registered owner.

    OK you buy 6 months of full coverage and then decide to drop your full coverage. Your finance company is informed because they are the lein holder on the title of the car. They will contact you and ask you how you would like to resolve this. Your choice is to reinstate your insurance or the finance company will insure the car to protect their interest. The finance company will charge you for insurance at a high risk rate.

    You can not sell your car without a release from the lein holder that appears on the title.

    If you would like to circumvent these procedures there is a place you can go. There are called District Court and jail.

    Why bother, Just get the insurance.

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  • by Scifisuz on June 26th, 2007

    Scifisuz

    Most finance companies require comprehensive and collision coverage to protect their investment...the car. You agreed to provide coverage when you signed the loan agreement.

    You also agreed to allow them to "force place" coverage if you allowed the coverage to lapse. Not a good idea; the covg they "force" will cost more than what you'd buy.

    The ins co notifies the lien holder (loan co) when the policy lapses. The loan co is listed as the loss payee...so in most states there's specific regulation re ins co responsibility in this area.

    Hope this is helpful.

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  • by Andy Is Wicked Married to Penal Colony on January 13th, 2006

    Andy Is Wicked Married to Penal Colony

    It depends on the finance company and the laws where you live, but I would have to say yes. I should know, I used to work for an insurance company. The lienholder/finance company typically asks that they are added as an interested party/lienholder to your policy and as such they are mailed a copy of your policy (which states what coverage is on the vehicle). This also ensures that they are sent copies of all cancellation/termination notices. So, if you fail to pay your premium, they are alerted to that fact and will force coverage on the car and send you the bill. The premiums on forced coverage are usually 2-3 times higher than the premium you pay to an insurance company on your own.

    As another user stated, it's hardly worh trying to skate by them. I saw many people buy and drop, as we called it, to get the car off the lot. Then they would get caught by the leinholder and have to buy a new policy and go through the paperwork and extra expense all over again. The average was about every 3 months.

    And finally, if you are not honoring the contract you have with the finance company (and how the car is to be insured is usually in said contract). . . .they can repo the car.

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