Read your contract to understand what minimum coverage you need on your financed car. Most lienholders typically require you to get full coverage (collision, comprehensive, and liability insurance).
How much coverage do I need for my financed car?
To drive legally in most states, you're required by law to have the state's minimum liability coverage. However, if you've got a financed car and a lienholder is involved in your policy, then you typically need more coverage.
In most cases, lienholder's require you to get full coverage (collision, comprehensive, and liability insurance).
What is a lienholder?
A lienholder is the bank, company, or business that loaned you the money for your car. Your lienholder is listed as the primary owner of your vehicle on your auto policy.
What happens if I drop auto insurance coverage on my financed vehicle?
- Driving without minimum coverage: It's a misdemeanor offense to drive a financed car without your state's minimum liability coverage. If caught, your license gets suspended and you pay a fine to your state. Sometimes the penalties are more severe, including jail time and car impoundment.
- Driving without your lienholder's required coverage: If your loan contract states that you need full coverage, you're required to keep this coverage to uphold your contract. If you don't, your lienholder gets force-placed insurance. This is added to your car loan payments. Not only is it more expensive, but it only covers your lender, not you.
What is full coverage?
Full coverage is an auto insurance policy that includes liability coverage, comprehensive coverage, and collision coverage. It provides protection for the following:
- Liability coverage: Damage done to another person's vehicle and property during an at-fault accident, including bodily injuries.
- Collision coverage: Damage repairs needed for your car after a not-at-fault accident. If necessary, replacement if your car gets totaled.
- Comprehensive coverage: Accidents done to your car by an object that isn't a vehicle, including damage caused by hurricanes, fires, and natural disasters.
Companies with the best full coverage rates for your financed car
We've put together a list of leading insurance companies. These insurers have competitive comprehensive coverage rates.
- Allstate: Allstate charges you an average rate of $295 per month for full coverage and also offers student discounts, good driver's discounts, and multi-policy discounts. Contact Allstate to get an easy quote, today!
- State Farm: State Farm provides full coverage at an average monthly rate of $145. You can cut back on the costs of your insurance premiums with State Farm by opting for one of their many discounts.
- GEICO: At GEICO, full coverage only costs an average of $180 per month. Cut back this amount even more by applying for discounts and earning loyalty rewards. New customers report saving up to $500 when switching to GEICO.
- Nationwide: Nationwide has full coverage at the average cost of $191 per month for your financed vehicle. Save money with multi-policy discounts as well as good driver discounts.
- Progressive: At an average rate of $199 per month, Progressive provides full coverage. Protect yourself and enjoy even more affordable rates by joining their loyalty program. Contact Progressive and get your easy quote, today!
3 Things to consider about coverage on a financed car
- Full coverage isn't always something that your lienholder requires you to have. Read your contract and ask your lienholder what coverage you're liable for.
- If you're required to have full coverage on your vehicle, you need to uphold this auto insurance coverage. If you don't, it works out to be more expensive for you as it gets added to your car loan payment at an increased rate.
- Compare as many quotes as possible to get the best deals. It's advised that you look at at least 3 quotes before purchasing your auto insurance.
Get the best coverage for your financed car, now!
Finding the best deals begins with looking at as many quotes as possible. Get instant quotes tailored to your needs - fill out our short form, today!