Financing and Full coverage?

[mikemikemike222]

Alright guys so i have seen many different people saying MANY different things about financing and full coverage or just having liability..

Can anyone answer this for me? I am not financing a car but one of my friends is and he said that you DO NOT need full coverage on a financed car but i always thought that you did have to have full coverage (or at least collision) on the car to protect the financing company that is financing the car for you.

Can somebody please clear this up? i have read on here that some people financed and only had liability on it but that makes no sense to me.

thanks!

[Tik-Tok]

Depends on your contract.

My Ford contract had an area for minimum insurance requirements, but it was blank. Not sure if someone just forgot to fill it in or what.

Not having full insurance is just stupid though. You get into an at fault accident, and now you're making payments on a car you can't drive.

[nytrydr89]

99.9% of lenders will require the vehicle has FULL comprehensive insurance if its financed and that the policy has a minimum of 1,000,000 liability and a maximum of 1,000 for collision and comprehensive deductibles.

sometimes you can get away with it because a lot of lenders do not require proof of insurance to fund a contract.

[ercchry]

depends... secured loan=full coverage, not secure=up to you

normally if the car is over a few years old the bank wont do a secured loan... its a personal loan (at least my experience with BMO)

[BokCh0y]

I've been told it depends on the finance company, but yes, 99.9% of them require you to have full coverage on the financed vehicle.

Obviously if the car is written off and you are at fault, the bank wants to make sure they will get they're money back. Besides screwing up their credit, what's to stop someone from not paying for a loan on a car that they can't drive anymore? That is what the RBC loan person told me when I had a financed vehicle.

I'm talking about a secured loan.

[Masked Bandit]

It is 100% dependent on what is in your financing contract. The insurance companies couldn't care less what you do. It is 99.9999% for sure that a financed / leased vehicle will need to carry full coverage to be in compliance. Sometimes when you get into things like motorcycles, RV's, boats (toys essentially) there is some variance but we're seeing more & more requirements even on that stuff.

It's pretty funny when we as insurance brokers will have lenders follow up every year on renewal with us to make sure Mr. Smith still has his $12,000 POS insured with full coverage BUT the same Mr. Smith runs a $500,000 mortgage on his house and it only gets checked when the mortgage is first set up.

[ddduke]

Doesn't even matter what you need, you'd have to be a complete fucking idiot to not have full coverage on a financed car. What if you write it off? Now you're stuck making payments on a lawn ornament.

[Cos]

.

[Graham_A_M]

^ This pretty much. Id assume the only way around it, would be to lie and say you sold the car, then (without telling the finance company) "Buy it back" (on paper) then insure it with liability only. But Ive never done that, as if you DID get into an (at fault) accident and wrote off the car, you'd be making payments to own a car thats essentially worthless garbage.

[mikemikemike222]

yeah it isnt smart IMO to only have liability on a financed car for that exact reason, if you write it off you will be basically paying for nothing.


thanks guys for answering my question!

[codetrap]

Originally posted by ddduke
Doesn't even matter what you need, you'd have to be a complete fucking idiot to not have full coverage on a financed car. What if you write it off? Now you're stuck making payments on a lawn ornament.

This... and that's if the lien holder didn't just call the loan because you turned the collateral into scrap. If you can't pay, they'd sic a collections agency on you, and you'd end up losing a LOT more. This is still while you don't have a ride. Good luck trying to get another loan to buy another ride in the future.....

It's funny, I talked to Rae, and she ended up pursuing a case where this exact situation happened. Force sale on the home....

[pheoxs]

Yeah you'd be stupid not to have full coverage on a financed car. It's what, a few hundred $ a month more versus writing it off and being out ten grand for an undrivable car. Then if the finance company finds out, they want the loan paid out and you're SOL.

[ercchry]

Originally posted by pheoxs
Yeah you'd be stupid not to have full coverage on a financed car. It's what, a few hundred $ a month more versus writing it off and being out ten grand for an undrivable car. Then if the finance company finds out, they want the loan paid out and you're SOL.

how spotty is your driving history?

a few hundred a month is about 20x more than collision coverage costs me

[pheoxs]

Originally posted by ercchry


how spotty is your driving history?

a few hundred a month is about 20x more than collision coverage costs me

Oops, I meant per year not per month. A few hundred a month would be ridiculious.

I think mines ~400$ more a year for collision versus just comprehensive and plpd for the FR-S? Full coverage is like ~1250 a year iirc.

[Graham_A_M]

^ Really? My co worker is 21, driving an '08 A4 and he's paying over $500/month, which is what I pay a year for mine lol.
I feel bad for him, but at times Im kind of glad Im older.

[Team_Mclaren]

^ pretty sure 500/month is higher than the AB cap for auto insurance.... maybe Mb can comment more?

[relyt92]

Originally posted by Graham_A_M
^ Really? My co worker is 21, driving an '08 A4 and he's paying over $500/month, which is what I pay a year for mine lol.
I feel bad for him, but at times Im kind of glad Im older.

Must have a really bad history to be paying that. DUI? License suspended? I'm 21 driving a car that's worth about about the same paying $245 a month.

[Supa Dexta]

My last financed car didn't require it. But that was a few years back now. I made it thru without an accident, and even if I did write it off I had the cash to pay it off. So for those who want to shoot off and call names. What's the difference to you?

[Twin_Cam_Turbo]

$500 a month? That's insane! I pay about $200 a month for my car and I am looking forward to that dropping soon I hope.

[FraserB]

Can't wait for my ticket to come off this year, should get me below $200 a month for full coverage on the truck and PLPD/fire/theft/glass/vandalism on the Jeep