All states require that you carry at least the state minimum insurance coverage, to be legally operating a vehicle. However, finance companies have the right to require more coverage then your state minimums.
First, let's look at understanding typical insurance coverage's:
- Liability coverage - This provides protection on claims against the insured when the insured vehicle causes property damage or bodily injury to someone else.
- Collision coverage - This provides coverage for losses the insured incurs as a result of damage to their insured vehicle from a collision.
- Comprehensive coverage - This provides coverage for losses the insured incurs which are not the result of a collision (for i.e., vandalism, theft, falling objects).
- Uninsured Motorist coverage - This provides coverage for losses the insured incurs from damages of an uninsured motorist or unknown motorist (hit and run).
- Medical coverage - This provides coverage for medical expenses the insured incurs for the insured and others from an accident.
- Your insurance company may offer other coverage's and higher limits; please visit your insurance provider.
Now, let's look at understanding how to read your insurance coverage:
Now knowing this, let's look at vehicle loans:
- Typically a finance company requires a minimum of 50/100/50 coverage, however the finance company does retain the right to require a higher limit.
- Lease transaction typically require a minimum of 100/300/100 coverage.
- If you have a lapse in insurance coverage, a finance company can force insurance and you will be subject to those insurance premiums, unless you can prove there was no lapse in coverage. If you did have a lapse, you can acquire new insurance and typically only pay the finance company's higher premium for the time period you did not have car insurance.
Properly cover yourself and your loved ones.
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