Is it true that you are obligated to have full coverage insurance when financing?

Question

I'm planning to finance a minivan, I was just wondering if this is true

Answer 1

That is true. The bank has a financial interest in that vehicle and would want to be fully compensated if you totaled it.

Answer 2

Yes most companies will require you have liability, comp & coll, which you would refer to as full coverage.  

Answer 3

Yes, it is true.  The lender will require that they are protected in case your van is a total loss.  

Answer 4

Yes.

Answer 5

Try getting an online insurance quote It's free and quick to do. http://www.usinsuranceadvisor.com/Auto-I...



Good Luck.

Answer 6

Yes, It is cheaper for you to pay for full coverage than to pay the full value of your van should it ever be totalled.  

right?

Answer 7

Yes. It will be written into your purchasing contract/agreement. The financing institution needs to be covered in case you wreck the vehicle and then stop making payments.

Answer 8

Yes, the lender wants to ensure their investment, the security for the loan, is protected.

Answer 9

Yes this is very much true!  If you do have insurance at the time you purchase the minivan and lapse or cancel later down the road, then the insurance company you had will let dmv know that your car isn't covered and the vehicle registration will be suspended until you provide proof of insurance.  

Answer 10

Yes. It is a general term of a car financing contract and usually requires that the lender be additionally insured so that the purchaser does not walk from a wrecked loan at the same time as walking from a wrecked car. As one of the previous posters pointed out, the lender will exercise due diligence to follow up with your insurance carrier and if you fail to insure or cancel the insurance, the lender will place the insurance with a carrier of their own choosing, which charges very high rates.

Answer 11

Absolutely! Your lender will take no chance that they won't get paid back for the loan, it's always required when financing, whether through a buy here, pay here lot, or through a financing institution.  

Answer 12

Yes, it is in your loan contract to maintain full coverage on a vehicle while it is financed. If you do not carry the required insurance coverage then the financing company will place VSI (Vendor Secured Interest) on your vehicle at your expense. It's much more expensive than insuring the vehicle on your own. Plus if you owe less on the vehicle than it's actually worth you will get nothing for it because the finance company will only secure insurance to pay off the loan - nothing else

Answer 13

Yes  and  if  you dont  and they notifie you to do so by certain time and you do not they get it  for you at  very extra cost.  We  went  that  recently  when AAA failed  to cover it as  full comp collision.

Answer 14

Yes, that is very true.  The company financing the loan has to make sure that their collateral is covered in case of an accident!  

Answer 15

I think this depends on the state your in. I'm currently making payments on my car and only have Collision. This is with American Family. I would check around to different insurance companies and see what they say.