If you have an auto loan, the lender will likely require you to have comprehensive and collision coverage in addition to liability and other coverage required by law, which your lender may refer to as full coverage. Lenders may also require additional coverages, such as coverage for uninsured drivers or additional expense insurance. Most lenders will require that you have full coverage for a financed car. This protects your investment in the event that you have an accident and the vehicle is destroyed, or if it is stolen, and you can no longer afford the monthly payments.
Yes, everyone who finances a vehicle must maintain fully covered auto insurance for the life of their loan. Technically, the lender still owns any vehicle that still has a balance left on the loan. Lenders require customers to maintain car insurance with full coverage to protect their investment. When buying full-coverage insurance for a car with a loan, you should notify your insurer that the car is financed, as your lender will have to be listed on the policy.
As a result, your lender will be notified when your policy is due, renewed, or canceled. When your loan ends, you can notify your insurance company so that your lender will exclude you from the policy. This type of coverage protects you if you're involved in an accident with a driver who doesn't have car insurance or doesn't have enough coverage. You should cancel your car's full coverage insurance when the cost of the insurance is equal to or greater than the potential payment, in the event of a covered event.
Getting an auto insurance policy for a financed car (or any other vehicle) is extremely easy and fast with Clover. If you buy full coverage and then don't maintain it, your lender may be able to take out expensive compulsory insurance or even regain possession of your car.