I just paid my car off. Am I supposed to tell my insurance company?

Question

Are you supposed to tell your insurance company when you pay off your car, even if you don't think you are going to adjust your coverage? The credit union received the final payment yesterday. They said they would send the title in 12 to 14 days. I would like to keep my collission insurance for awhile yet. According to Kelly Blue Book, my car is still worth $6100. Thank you.

Answer 1

Yes, you need to let your insurance company know that it is paid off, but more as a courtesy than anything else, since you will not be adjusting coverages. They need to know it's paid off so that if there is an accident, the check for the entire amount of damages will be made out to you directly, and not to the credit union who you originally financed through. They will probably just make a notation on their records that there is no longer a lien-holder and you are sole owner.

Answer 2

It's not really necessary. Your credit union was listed on the insurance policy because they owned a security interest in the car because of the loan. If there was ever an accident and your insurance company was making a payment, they would first check with the credit union to see the amount of the lien they were claiming. Since the loan is paid off, they would respond that nothing was owed, and the insurance claim would be paid in full to you. Once you receive the title from the credit union, you could forward a copy of it to your insurance, as the title would show that the credit union had released its security interest in the vehicle and would no longer need to be listed. The choice is up to you, it doesn't affect your rates in any way.

Answer 3

You can keep the full coverage insurance if you wish to do so. My insurance company started asking if I wanted to drop it after the truck was 5 years old but I kept it for another two years. My truck was paid off when I drove it off the lot new. I would let the insurance company know though.

Answer 4

You need to let them know so that if you are in an accident, the check will be sent to you and not to the credit union. I beleive the credit union will notify the insurance company that the loan has been satisfied but it never hurts to be proactive.

Answer 5

Absolutely. You still have to have insurance even if the car is paid off. What do you think will happen if you get into an accident or someone hits you and it wasn't your fault? How will you be covered?

Answer 6

you can keep the same coverage without notifing the insurance co. Unless you plan to downgrade the coverage then you would have to call them. Other than that i would leave things as they are, Peace.

Answer 7

Yes do tell them now. You rarely might qualify for a discount. Also you need to let them know the lein is released in case of a accident. Or they might send the check to the bank!!!

Answer 8

Insurance is still required, but the only thing you MUST have is liability insurance, in case you have an accident (whether it be your fault or not, doesn't matter)

Answer 9

Doesn't hurt. They can take the lein off your policy.
Also make sure within 3 weeks you receive your "TITLE" in the mail. If not, call your local DMV. ;-)

Answer 10

Now that it's paid off, you don't have to have full coverage if you don't want to.