Does Financing a Car Affect Your Car Insurance ?

Lenders Require Full Coverage

The main difference between having a loan on a vehicle verses not when it comes to car insurance is that lenders require both comprehensive coverage and collision coverage on top of the state minimum requirements.

Can I Reduce My Coverage in the Winter Months ?

Most financed cars are required to carry full coverage all year round until the loan is paid off per the lender. Some lenders will allow you to put vehicles in storage when it is not in use but documentation from your insurance carrier will probably be required along with your signature verifying you will not drive the vehicle. The lender will most likely have a specific form you will take to your insurance agent for them to fill out. Storage on a vehicle can be a big cost savings and it is worth it to ask your lender if it is a possibility.

How Does a Lender Know What Coverage You Have On Car Insurance ?
Financing a vehicle comes with a little extra paperwork. The lender will want to be added onto your car insurance policy as a loss payee. Insurance carriers update loss payees through mail of any changes to the policy regarding the vehicle they are listed on. It includes late payments, coverage changes, and policy cancellation.

Being required to carry comprehensive and collision by your lender will most definitely raise your car insurance rates when compared with a liability only policy.