What happens if I don't carry insurance on my financed car?
What happens if I stop paying for insurance on my car? I'm still paying my car and am considering removing insurance.
Answer provided by
Answered on Jul 09, 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.
“If you don’t carry car insurance on your financed car, you will likely be in violation of your contract with your lender.
If your lender finds out, they could place mandatory coverage on your vehicle. This is often significantly more expensive than a regular insurance policy and will be added to the balance of your loan.
You could also face additional ramifications for not having insurance. Most states require a minimum amount of insurance or you’ll face fines or legal action.
Without insurance, you also become responsible for all damage. If your car is totaled tomorrow, you are responsible for paying the remaining balance of your loan. If you aren’t able to make payments, you’d likely be sent to collections for the remaining amount.
If you’re trying to save money, you should look into other insurance carriers. You may be able to find a lower rate with another carrier without violating the contract with your lender. Use a smart comparison tool like Jerry to help you find the best rate.”
Did this answer help you?
Ask us a question by email and we will respond within a few days.
Have a different question?
You can meet us at our office and discuss the details of your question.
Browse by topics
What others are asking
Why do financed vehicles get repossessed?
Could your vehicle get repossessed for not having insurance? Or is it only because you don't pay your loan?
Jul 09, 2021
Does expired car insurance still cover you?
My insurance expired yesterday. Would my car still be protected? Am I still able to drive?
Jul 09, 2021