Do I Have to Carry Full-Coverage If I Have an Auto Loan?

Often, when people are purchasing a vehicle through financing in Okeechobee, FL, they find themselves having to carry full coverage auto insurance. There is some confusion revolving around the insuring of financed vehicles, but it is more straightforward than it seems. First, it is crucial to understand that the state is not who requires you to have full coverage. If you were to get pulled over in a financed vehicle, the law only requires that you have liability- just as with any other vehicle. 

It is the finance company- the lender- that requires full coverage insurance. Until you have finished paying the vehicle off, it does not belong to you. It remains the property of your lender. If you are involved in a wreck, you could walk away from the vehicle and loan and leave the finance company responsible for the cost of the damage to the vehicle. 

Due to this, lenders often require that you carry full coverage until the loan is paid off. Sometimes, they allow borrowers to change over to liability once a certain percentage of the loan is paid off. If you fail to carry full coverage until the specified time frame is met, you are going against the contract between yourself and the lender. Breaking any portion of the agreement gives the lender the right to take legal action, including taking the car back. 

Your lender should discuss all of the necessary requirements with you before signing the loan. If you are unsure of the exact requirements, reach out to us here at Pritchards and Associates, Inc. We will help you take a look at the specified conditions and help you find the necessary insurance coverage. Whether you are looking to purchase new insurance, update old coverage, or swap to a provider who can help meet your needs, Pritchards and Associates, Inc. of Okeechobee, FL is here for you. Give us a call or stop by our office today!