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Insurance on a Financed Vehicle

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I bought a new car 6 months ago, and my auto insurance policy just lapsed. Can the finance company take out an insurance policy and send me the bill for it? What do I do?

When you finance a vehicle your loan documents normally specify that you are required to carry full coverage auto insurance for the life of the loan. This means liability coverage as well as comprehensive and collision. If finance company finds out that you no longer have the proper car insurance coverage, they will get insurance for you and make you pay them. There are state regulations on this, so the finance company can’t send you a bill for a ridiculous amount. They should only charge you what they are paying for the insurance themselves. The finance company may be able to repossess your car if you refuse to pay for the insurance or get your own policy.

Either way, it is in your best interest to have good auto insurance coverage. If your policy has lapsed, do everything you can to get it reinstated, or call another insurance company and get a new policy with them. You might also want to set up an automatic bank draft to ensure you’re your insurance premium is always paid on time. Make sure you shop around for the best auto insurance rate. You don’t want to end up paying too much.

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