Question:
When a finance company forces insurance on a car your financing from them,what is exactly covered?Is it only an accident that 's covered?
Answers:
If you hit someone from behind when driving is it always your fault?
You have to first understand the different parts of insurance. First, liability coverage (bodily injury and property damage), this covers the damage or injury you cause to other drivers. Then there is uninsured and/or under-insured motorist bodily injury and property damage coverage which protects you if you are injured or sustain damage by someone that either doesn't have any insurance or not enough to cover the damage they caused. All of the above are required by the state in order for you to legally drive & register a vehicle on public roads. And sometimes medical coverage for you and any guest passenger may even be required too.Then comes physical damage coverage. You know them as comprehensive and collision coverage. This is what is required by your lender. The reason for these coverages is to make sure if there is any damage to the vehicle it will be repaired because they are the joint owner of the vehicle until you complete paying for it. Comprehesive coverage is any damage other than a collision. In other words, tree falls on your car, hail damage, theft, fire, ding in your door, ect. And of course collision is hitting another vehicle or object. Hope I helped a little.
Typically the insurance from the finance company is only "gap" insurance (covers any difference between what your insurance or another parties insurance will pay and what you owe) and insurance coverage in the instance that you DONT have insurance, but you're required typically to have your own coverage that is supposed to cover all that stuff, and they'll come after you if their insurance has to be used because you failed to comply with that obligation.
They are only providing you with comp & collision coverage, no liability. This insurance is W A Y expensive and based upon a percentage of your loan.if you have this insurance on your loan you should immediately purchase additional insurance on your own so the lienholder insurance will cancel. You still owe for the time they provided the coverage but it won't be an arm & leg (maybe just a finger).
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