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Auto Insurance

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Anonymous
Not applicable

Auto Insurance

Hey guys, quick question.

 

If you finance a car, do you need to have minimum required to have because you're financing? I mean, like a minimum obligatory Property Damage Liability or Bodily Injury Liability , Personal Injury Protection, etc.?

 

Thanks!

Message 1 of 3
2 REPLIES 2
SCF
Valued Contributor

Re: Auto Insurance

Auto insurance has different components.  The liability component covers your liability in the event that you cause damage in an accident.  Comprehensive and collision coverage cover the costs to repair or replace your vehicle in a situation where it is damaged by either collision, or another event like theft, weather damage, etc.  Your state will have a standard for the minimum amount of liability insurance you are required to carry.  Your auto lender will require you to carry comp/collision, and may even specify a maximum deductible for those policies.

 

You should also visit with your insurance agent about whether you need gap insurance.  If you owe more on a vehicle than the insurance would pay to replace it, gap insurance will cover the difference and ensure that your loan is paid off in the event the vehicle is a total loss.

Message 2 of 3
DaveInAZ
Senior Contributor

Re: Auto Insurance

If you finance a car the lender isn't too concerned about liability as most states have minimum liability requirements. What the lender is concrned about is that damage to the car is covered - collision & comprehensive. I recently financed a car and the credit union requires me to have only $500 deductible coverage for both. I usually carry $1k deductible and drop any collision & comp coverage when the car's value drops below $4k - I consider insurance is coverage for major events, not minor things I can afford to cover myself, because if you use insurance for the small stuff they jack up your rates.

Message 3 of 3
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