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Auto Insurance on a Financed Vehicle

Financed Vehicle Insurance, Full Coverage Insurance, New Car Insurance Comments Off on Auto Insurance on a Financed Vehicle

I am financing a new car. Can the lien holder repossess my vehicle if I do not pay for auto insurance?

If you are financing a vehicle, the lien holder will require that you carry full coverage auto insurance on the vehicle for the life of the loan. You will be typically be required to send in proof of insurance coverage to the lender within a week of purchasing the vehicle.  If you do not purchase the
correct amount of auto insurance coverage or do not purchase an auto insurance policy at all, the lender can choose to repossess your vehicle.

If you do not have full coverage insurance the lender will see you as too high of a risk and will not let you continue to drive around in a car that is not insured. For example, let’s say that you bought a $30,000 vehicle and financed $25,000. If you get in to a car accident and total the vehicle without insurance coverage, you will still owe the lien holder that $25,000. In this situation you would be required to pay for the repairs or pay off the loan out of your own pocket.  The lender is not going to take this risk, and this is exactly why they require the owner of the vehicle to have insurance coverage.

Unfortunately, there is no way to avoid paying for full coverage insurance if you finance a vehicle.  Once you pay off the loan on your car, you
can choose to reduce your insurance coverage to liability only.  To make the cost of your insurance more affordable, take some time to compare quotes from multiple companies.  The more time you spend comparing quotes, the more likely you will find the cheapest auto insurance possible.

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Texas Full Coverage Insurance Rates

Full Coverage Insurance, Texas Auto Insurance Comments Off on Texas Full Coverage Insurance Rates

I just finished paying off my vehicle.  Am I still required to carry full coverage auto insurance in Texas?

If you are no longer financing your vehicle you are not required to carry full coverage auto insurance. However, that does not mean that you should rush out and reduce your auto insurance coverage.  Remember, that full coverage provides both coverage for your vehicle and any other vehicles or property that is damaged in an accident.  Liability insurance only provides coverage for other vehicles and property that is damaged in an accident. It does not provide coverage for your vehicle if you are involved in an accident.

For example, if you are involved in a car accident and the repairs for your vehicle total $10,000 you would have to pay that much out of your own pocket.  At that point you would probably wish you still had full coverage car insurance.  Some people that own a vehicle that is not worth very much find it a better idea to only carry liability insurance.  If your vehicle is only valued at $1,000, it is probably not worth it to you to pay an extra $50 a month or more to insure it with full coverage. On the other hand, if your vehicle is worth $20,000, it would definitely be worth it to you to carry the additional coverage just in case of an accident and that financial strain it could place on you if you did not have the proper coverage.

If you are unsure about how much auto insurance coverage is right for you, take some time to speak with an insurance agent.  Also, spend some time doing a little comparison shopping to find which company can offer you the best coverage at the most affordable price.

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