Do dealerships require full coverage insurance?

Auto lenders impose the full coverage requirement because they want the vehicles they finance, which are technically still their assets, to be protected with the most insurance coverage possible so they can collect the vehicle’s value in case of an accident or theft of the car.

Do dealerships know if you have insurance?

Yes, dealerships verify insurance. For new and used, leased or financed vehicles, you will need to provide proof of insurance to the dealership.

Does a financed car have to be fully insured?

Yes, everyone who finances a vehicle must maintain full coverage auto insurance for the life of their loan. The lender still, technically, owns any vehicle that still has a balance left on the loan. Lenders require clients to maintain full coverage auto insurance to protect their investment.

What happens if you don’t pay insurance on a financed car?

The lienholder can legally cancel your auto loan and take back its vehicle through repossession if the company finds you driving with no insurance on a financed car. Force-placed insurance means that the lien holder buys the required level of insurance and then tacks on the cost to your monthly payments.

What happens if you only have liability on a financed car?

Typically, no. You don’t want liability only because the car will not be sufficiently protected. Financing companies require this because you owe money on the car and they need their loan covered, and if something happened and you only have liability, you would be responsible for the full loan and not have a car.

Do car finance companies verify insurance?

Most lenders require that you show proof of full coverage before you can even leave the dealership with your new vehicle. They will also continue to check that you carry full coverage throughout the loan.

What is considered proof of insurance?

Proof of insurance can be in the form of an insurance ID card or other document from your insurance company. To meet the proof of insurance requirements, your ID card or form must show the policy number, policy effective dates, covered vehicle, and policyholder name.

What is full coverage on a financed car?

Full coverage insurance is an insurance policy that protects your vehicle from accident-related and non-accident-related damage, ensuring you are covered regardless of fault. Full coverage insurance often consists of collision insurance, comprehensive insurance, and at least the minimum coverage required by state law.

How long can a financed car go without insurance?

Grace periods for having no insurance on a financed car range from a single day to thirty days depending on the state. Losing insurance will make you go into default on your loan, and your insurance company will report the lapse in coverage to your lender automatically.