What happens if I only have liability coverage on my new car?

Question

I just bought a new car, and I only have liability insurance, will the finance company contact me and ask for me to raise it to full coverage or no?

Answer 1

Yes, when you purchase a new car, you sign a contract stating that you will have comp/coll coverage, (usually refered to as full coverage) on your car within 30 days. If you do not comply with this, they will put a "Force Insurance" on your vehicle. This will increase your car payment. I suggest that you find insurance on your own, it's way cheaper. If you dont have comp/coll coverage, in case of a total loss, you will still owe your finance company for the car, even if the car is a total loss.

Answer 2

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RE:
What happens if I only have liability coverage on my new car?
I just bought a new car, and I only have liability insurance, will the finance company contact me and ask for me to raise it to full coverage or no?

Answer 3

So if you have a leinholder, or loan, the finance company requires damage to your auto coverage until the note is paid in full. If you do not get your own "full" coverage, called Damage To Your Auto, or Collision and Comprehensive, then they will add what is called "force-placed insurance"

This is sooooo much more expensive then your own policy. So, if you must, call your insurance company up, choose the highest deductibles you can, usually $500 with a finance company, then you wont have future issues. Make sure to tell your insurance company who holds the loan so the proper forms get sent to them. If you get a letter from the finance company give that to your insurance agent.

Answer 4

Here in Pa. just about every lending institution around requires that you carry full coverage before they will lend the money. What happens if the car is stolen or wrecked & you just have liability? You still have to make the payments & you no longer have the car. They insist that you carry full coverage to protect their investment.

Answer 5

The last time I financed a car, they wanted to see coeverage before I could drive it off the lot.
when I paid cash for a car, they didn't really care. They wanted to see the insurance, but it didn't matter to them. They had their money.

Get the insurance and tell the finance company you have it and give them the policy number. If you are in a wreck and the car is totalled then the check will go to the finance company inastead of you, so they have theri money first.

Good luck

Answer 6

If you read your fine print, I am sure that the financier required full coverage insurance as a condition of the loan. I would be careful, that same fine print usually allows the company to charge you whatever they choose to provide that coverage if you fail to obtain it on your own. Get some low cost insurance from companies that have to keep the rates competitive before you get royally screwed.

Answer 7

Yes, they probably will, I know when we bought our car 2 years ago it was financed through my bank and I had to have full coverage on it. That was a have to in Texas that way if I have an accident it will cover what I owe on it. I went with Geico insurance and told them I Financed my car through my bank and I wanted the bare min. on what you had to have on full coverage, other wise they stick a bunch of other crap you don't need and it cost me like 52.00 a month!

Answer 8

They require you to cover the vehicle in full. They will require a copy of the insurance declaration stating that you have full coverage and that you list them as an additional insured. If you don't go out and get the insurance, they will get it for you for about 4-5 times the normal rate.

Answer 9

I would be surprised if the loan agreement you signed did not have a stipulation that you insure for collision and comprehensive with a certain specified minimum deductible.

Undoubtedly the finance company will be contacting you asking you to provide proof of coverage.

Read your contract. If it's required (it will be), get the insurance.

Answer 10

You bet. If you DON'T get full coverage the finance company will take out vendors single interest insurance on your car and add the cost to your monthly payment (about double what normal insurance costs).