Is it necessary to have complete coverage on a financed vehicle?
Your lender will almost always require full coverage auto insurance on the vehicle you’ve financed. This safeguards their investment in your vehicle. They want to know that if it is damaged or destroyed in an accident or by another risk, the vehicle will be repaired, or that if it is destroyed, they will be paid for the money they owe. Below are the things involved in full coverage:
Liability insurance helps cover the costs of any damage your car does to other people, vehicles, or property. If you’re at fault for an accident, the bodily injury element of your liability insurance covers medical and legal expenses. The expense of repairing another person’s car or property that you damage with your vehicle is covered under the property damage section. Liability does not cover the cost of repairs to your car.
Collision insurance covers the cost of repairing or replacing your car after it has been damaged in a collision. This is the policy that pays for the repairs to your car following an accident. This coverage is required by your lender so that they may be confident that the car will be fixed or that they will be compensated if it is totaled in an accident.
Accidents aren’t the only thing that can cause a car to be damaged or destroyed. Comprehensive coverage covers weather, fire, vandalism, animal strikes, and even flood damage. This coverage is also required by your lender, so they know the automobile will be fixed or replaced if it is damaged by the risks covered by comprehensive coverage.
If your car is damaged by an uninsured or underinsured motorist, this policy might assist cover the cost of medical expenses and in some cases, repairs.