YOU ASK:

Does an auto insurance policy have to be in the same name as the car loan?

WE ANSWER:

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.

Was this question and its answer useful?
Not a bit
  • Currently 5/5 Stars
  • 1
  • 2
  • 3
  • 4
  • 5
Very useful
Have a question about insurance? Ask the experts
Share: