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If you don’t keep full coverage on a financed car, you could be held responsible for paying for the vehicle in its entirety in the event of theft or an auto accident. You could also lose the car to the lender you signed a contract with if you don’t keep full coverage on your financed car.
Nearly all lenders require that drivers carry full auto insurance coverage when they initially finance a vehicle. Lenders also usually stipulate in the contract that some form of full coverage is to be maintained for the life of the loan. 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.
So, if you don’t keep full coverage on a financed vehicle, whether because you miss payments or you purposefully cancel the coverage, you’re likely in breach of your contract. Your insurance company or the DMV may contact the lienholder (lender) to alert them of the change, at which point your lender can legally cancel your contract, request full payment of the loan, or even repossess the vehicle.
Sometimes, if your lender finds you’re not keeping full coverage on a financed vehicle, it will contact you to give you a chance to have it reinstated. If you fail to do this, your lender could purchase an auto insurance policy for the vehicle and add it to the cost of your loan in what’s called “force-placed insurance.” These policies are typically expensive.
Ultimately, it’s best to keep full coverage on a financed car until you own it outright. Only then can you choose the level of car insurance coverage you want, as long as it meets your state’s minimum requirements.
People also ask
Does GEICO offer full coverage insurance?
Yes, GEICO offers full coverage car insurance. Full coverage from GEICO typically includes at least a state's minimum required car insurance coverage along with collision and comprehensive insurance to protect the policyholder's vehicle.
Full coverage car insurance from GEICO costs $2,886 per year, on average, and is more expensive than a liability-only policy since it provides more coverage.
Cost of GEICO Full Coverage by Driver's Age
| Driver | Annual Cost |
| ... | $5,236 per year |
Do I need full coverage on a financed car?
Yes, you need full coverage on a financed car. Any reputable lender will require drivers with a financed vehicle to purchase comprehensive and collision insurance, in addition to the state’s minimum required car insurance coverage. Your contract with the lender might even require you to choose a specific deductible to ensure that you will be able to pay it if you file a claim.
Why You Need Full Coverage on a Financed Car
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read full answer by WalletHub, Financial CompanyWhen should you drop full coverage on your car?
You should drop full coverage insurance on your car when the cost of the insurance equals or exceeds the potential payout, should a covered event occur. You may also want to drop full coverage if you are willing to pay for repairs out of pocket, or if you would prefer to replace your vehicle if it’s damaged.
For example, an older car with high mileage may not be worth costly repairs, and you might want...
read full answer by WalletHub, Financial CompanyDid we answer your question?
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