How does lender know if you don't have adequate auto insurance?

Question

When you finance/lease a car, the lender requires comprehensive & collision insurance with a $500 deductible. How do they know if you have adequate coverage? Suppose you only have 300/100 liability. Secondly, if they find out what would they do?

Answer 1

when you get insurance, the insurance company notifys the dmv. then the dmv notifies the lien holder. so get insurance.

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Answer 2

When you add the vehicle to your insurance policy, you have to give the name of the finance company.  In turn, your insurance company sends them a declaration page showing your coverage.  If it's not adequate, they will contact you & let you know.  If you don't respond or don't get the necessary coverage that was requested in the contract that you signed they have 2 options:  add the necessary coverage to your contract, which makes your payment go up (usually very expensive) or repossess that vehicle due to breach of contract

Answer 3

some companies will not even let you list your lender as an additional interest on the policy if you do not have full coverage on the vehicle. they won't get the letter and policy info, so they call to check on your coverage. like someone else said, don't fool around.  the lender owns the vehicle and their top priority is to make sure it is insured. they check and double check.

Answer 4

they require the company to send them a copy of the coverage and also inform them of laps is coverage ok.. do not fool around you might wind up wanting..

Answer 5

The lender is interested mostly in comprehensive and collision coverage to protect "THEIR" vehicle.  They know what coverage you have because the insurance company is required to send proof of insurance to the lender.  They do communicate !