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What Happens if I Can’t Pay for the Full Coverage My Vehicle's Lender Requires?
December 22, 2020
The consequences of not carrying proper insurance can be severe
The lender’s remedies for not carrying proper insurance will be spelled out in the loan agreement signed when the vehicle was purchased.
Check your contract. You will find a clause that reads something like this:
Check your contract. You will find a clause that reads something like this:
The remedies for not carrying proper insurance coverage available to the bank include:
In the event the insurance is not paid, or the additional loan amount as a result of forced placed insurance is not satisfied, the next step would include:|
The details of this question describe the purchase of a motorcycle. If the amount borrowed is not too high, you may be able to offer some other form of collateral to secure the loan - or - depending on your credit history, negotiate a loan without collateral.
It is always in the auto loan consumer’s best interest to:
Letting the bank take action without attempting to work it out yourself will always lead to a less desirable result.
- Forced Placement: The Bank will obtain Comprehensive and Collision insurance…
- At Your Expense: The bank will pass the cost on to you. If you refuse to pay it will be…
- Added to Your Loan: With interest.
- At Higher Cost: At a cost that is likely much more expensive than coverage you could obtain yourself.
- Protects Only the Bank: You will not be a party to the coverage. The insurance will only protect the interest of the bank.
- No Liability or Medical Coverage: The bank is only concerned about securing their collateral. They are not a party to liability or medical loss. If they procure coverage, there will be no consideration for liability or medical losses.
In the event the insurance is not paid, or the additional loan amount as a result of forced placed insurance is not satisfied, the next step would include:|
- Repossession:
- Seizure of the Collateral: When you signed the loan agreement, you offered the car as collateral (say, guarantee for payment of the loan). Not adhering to the agreement (the contract) will result in the capture of the asset for which it is assigned as collateral.
The details of this question describe the purchase of a motorcycle. If the amount borrowed is not too high, you may be able to offer some other form of collateral to secure the loan - or - depending on your credit history, negotiate a loan without collateral.
It is always in the auto loan consumer’s best interest to:
- Procure their own insurance and keep it in force
- Proactively negotiate with the lender.
Letting the bank take action without attempting to work it out yourself will always lead to a less desirable result.
This article may have been originally published at Quora.com.
To see Jeff's Quora.com profile click here.
“Am I covered if I drive someone else’s car?” Or, “Am I covered if someone else drives mine?”
Many don’t realize that the insurance industry is one of the country's most regulated business segments, especially in New York State. The New York State Department of Financial Services (NYS DFS) wields significant control over the insurance business and has a stated goal of protecting consumers.
Most property insurance companies offer Actual Cash Value or Replacement Cost settlement options. Typically, insurance companies will require that you insure the property to the settlement value you choose. If you select Actual Cash Value, the amount you may be required to insure the property for will be less than the corresponding Replacement Value.
In that spirit, the Ryan Agency is sponsoring a Stearns BBQ Dinner pickup at our office on 57 Broadway Mall in Hornell on September 12th from 3:00 PM to 4:30 PM.
Today, an individual’s credit history can play a more significant role than any one of those traditional factors. Good Credit Scores lead to a Positive Insurance score. A good Insurance Score greatly influences what someone will pay to insure their vehicles.
Insurance companies offer various discounts for which their policyholders may qualify.
Great Eight number Six (6) suggests taking a look at removing Comprehensive and Collision on Older Vehicles.
By reducing the number of claims in your insurance history, you can significantly affect your rates in the future.
Sometimes, this concept meets with resistance from policyholders. The thought of paying more in the event of a claim is off-putting to some. Even if that means I pay more for my insurance.
OK. Admittedly, this strategy doesn't benefit everyone, but it can be very beneficial for those it does. You may have unique home or auto insurance needs that prevent you from bundling with the same company. Alternatively… you might have a better rate without the bundle discount by splitting up your insurance between multiple carriers.
