Does an auto insurance policy have to be in the same name as the car loan?
Yes, and this is not a requirement of the insurance company but of the finance company that gave the car loan.
For you to be granted a car loan, you will need to be covered with an auto insurance policy under your name. And the finance company will require you to get the full coverage policy - not just liability coverage but collision and comprehensive coverage as well.
Basically, this is to protect the finance company's interest in your car. If something happens to the car while t is not yet fully paid, the finance company would like to ensure that:
- The car is fixed so as to prevent its value from decreasing considerably, as compared to the expected decrease the car will have with standard depreciation.
- If the car is declared a total loss, the finance company can recover the unpaid balance of the car.
Having the auto insurance policy in the same name as the borrower will also simplify the process when you need to claim, since the claims settlement check will also be named after you.
Now, if you are the borrower, fail to meet this requirement, the finance company has the right to consider that you have defaulted on your finance contract. In this case, your car may be subject to repossession and any other legal actions that the finance company may perform.
List of Included Drivers
Even if the policy is in your name, you also need to list down all the drivers that should be included in the coverage. This includes yours, children and any other persons living in your household that have regular access and permission to drive the car. This is to ensure that there is coverage even if another member of your household is the one doing the driving.
| Not a bit | Very useful |
- How is PLPD insurance different from no-fault or full coverage auto insurance?
- What is the difference between assigned risk and non-standard auto programs?
- What is PLPD (Public Liability and Property Damage) auto insurance?
- Where do you find commercial automotive liability coverage?
- What does an insured driver do when hit by an uninsured driver?
- What is the difference between standard and non-standard insurance?
- At what value of your automobile should you change from full coverage to liability?
- What is the difference between full coverage and public liability insurance and property damage insurance?
- How much money do you get if your car is totalled?
- Does company insurance or workman's comp cover car accidents while working?
- How do you handle the insurance after a 'hit and run' accident when you took down the license plate number?
- Will your premiums go up if you were involved in an auto accident but were not at fault?
- Do you have to pay taxes on money you received in a car accident settlement?
- How does the insurance company decide whether to total or repair the car?
- How long can an insurance company keep a DWI conviction on your record?
- Will a parking ticket or a seat belt violation ticket raise insurance rates?
- What is GAP insurance? How does GAP insurance work? What does GAP insurance cover? Is auto GAP insurance needed?
- What is the difference between GAP and comprehensive insurance?
- Do automobile insurance companies pay for pain and suffering?
- How can I be legally covered with car insurance when using a carpool service?