 Banks can indeed force-place an insurance policy on a vehicle being financed if the required coverage is not purchased by the owner. The reason behind this is that the banks want to protect their collateral so that in the event of failed payments, they can repossess the vehicle and sell it at auction to recuperate the money lent out. It's usually a lot cheaper to buy coverage elsewhere than to wait until a bank adds their own expensive policy and bills the customer. Sometimes they will add it to the car payment invoice. When banks force place insurance on a vehicle, it may be perfectly legal because it was likely agreed to when the finance agreement was signed.
Required insurance coverage for financed vehicles:The required coverage for finance vehicles is usually comprehensive and collision auto insurance which protects the vehicle physically, from damages as a result of a collision with another vehicle, object, vandalism, fire, replacement due to theft and more. The price of comprehensive and collision coverage is based on the: - vehicle
- geographic location
- driver(s)
- deductibles (higher = cheaper)
How much does comprehensive and collision coverage cost?
In order to find out the cost, use the Internet to get auto insurance quotes from multiple companies and compare rates side by side. This will broaden choices and allow for more options.Important things to know about car insurance added by banks: It's extremely important to realize that most insurance that is automatically added by finance companies and banks may be quite limited and usually do not satisfy the financial responsibility laws of the state. This means that even though you may be driving with coverage added by your bank, you may still get a ticket for not having the state-required coverage which is usually liability insurance. Related informative articles: |