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How does the lienholder know if my policy has full coverage or not?
My car payment only has about six months left to it, and I’m tired of paying so much for insurance. Would my lienholder know if I removed full coverage at my policy renewal?
Shannon Martin · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
Your
car insurance
company is responsible for letting your lienholder know if your policy has full coverage
or not. Here’s how it works:- This designation means your insurance carrier will immediately notify your lienholder if your full coverage is dropped or your policy is canceled.
- In most cases, your lienholder will send a letter giving you about 30 to 45 days to reinstate yourfinanced car’s required coverage.
If you don’t keep full coverage: Your bank or lienholder will typically add charges for
force-placed insurance
to your total loan amount. This is typically much more expensive than the cost of collision and comprehensive coverage on a standard full-coverage policy.If you’re already nearing the end of your loan term, consider giving your lienholder a call. There’s a small chance that they’ll lift your full-coverage requirement early while you finish
paying off your loan
.View full answer
- Gregory R.
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