Auto Insurance Coverage for Financed
Vehicles |
You may ask the question: What auto insurance coverage is required for financed
vehicles?
 If you’re financing a vehicle, it is likely that your finance
company will require physical damage coverage for your vehicle in order to
protect their collateral in the loan, the vehicle itself.
What a finance company wants to avoid, is a situation where the vehicle being
financed becomes damaged or stolen and is not repaired or replaced. This can
lead to consumers failing to make their payments or finance companies not having
anything to repossess in case of failed payments.
Physical damage coverage is broken down into two parts;
- Comprehensive Coverage - covers damages or pays replacement of your vehicle
in case of theft, vandalism, fire and related damages other than those caused by
a collision.
- Collision Coverage - is just that, coverage for damages as a result of a
collision. This coverage will repair your vehicle’s damages or will pay the
value of the vehicle if it is un-repairable.
Comprehensive and Collision coverage comes with a deductible which is the amount
of money an insured is required to pay in order to begin repairs. A deductible
can range from $ 0 – 1,000 and sometimes even higher, which is not recommended.
The higher your deductible is, the lower your insurance premiums will be;
however, you must keep in mind that you will be required to pay the deductible
in case of a claim, so make sure you can afford it.
Comprehensive and Collision coverage is based on your vehicle’s replacement cost
and other factors such as how often it’s stolen, and even the driver’s
information such as age, gender, driving history and more.
It is important to maintain physical damage on your vehicle if you’re financing
it, not only because it provides valuable coverage, but because if you do not
provide your finance company with proof of coverage, they may add their own.
When a finance company force places a physical damage policy on your vehicle,
the premiums can be sky-high; additionally, keep in mind that physical damage
policies do not include liability, or any other coverage that may be mandatory
by State laws.
If your finance company already forced placed coverage, you may still purchase
your own policy and have them remove their policy by providing them with proof.
The best way to find competitive rates on Comprehensive and Collision coverage
is to complete a rate comparison. OnlineAutoInsurance.com allows you to
compare
auto insurance quotes online from multiple companies with one simple process.
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