Does your car insurance change once you pay off your car loan?

My car will be paid off next month. Do I need to do anything with my car insurance? Will my coverage change?

“Your car insurance coverage won’t change after you pay off your vehicle unless you decide to make changes.
Before you make any changes to your coverage, call your car insurance company to remove the lien from the policy. If your vehicle is totaled in an accident, the payment will now go to you instead of your lender.
Beyond this, analyze the coverage on your policy. Some people choose to reduce the amount of coverage they carry once their vehicle is paid off, but this isn’t a steadfast rule.
You can continue to have comprehensive insurance and collision insurance, or you can opt for liability coverage depending on your needs and financial situation.”
Emily Maracle
Answered on Jul 29, 2021
Emily Maracle is a car insurance specialist living in New York. Originally from the Pacific Northwest, she has a degree in English Literature and a background in customer service. She enjoys cooking, gardening, and living sustainably. In the future, she can't wait to upgrade to a hybrid or electric car.

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