Can a bank repo an auto if your auto insurance cancels?
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10 Responses
1.27.2010
Best Answer – Chosen by Voters Your finance contract requires you to keep insurance on the vehicle, to protect the lending institution. Depending on the way the contract is written, they may be able to declare the loan in default and require you to pay the car of. They may purchase insurance (at a much higher cost than you would pay) and either add it to the balance of the loan or require you to pay it. They may also repossess the vehicle. If you are current with your payments and have a good payment history, they are less likely to repossess the vehicle than if you are a "problem account".Go and get insurance tomorrow morning! Do not drive the car with out insurance! Source(s): 28 years in the auto business
1.27.2010
Answer from a General Insurance Agent.Yes they definitely can. Every Auto finance note requires in the language of the contract that you must carry comprehensive and collision coverage to protect the lenders interest in the vehicle until it is paid off. Failure to maintain the coverage puts your finance contract in default. Liability insurance only is not sufficient to meet the requirements.If you let your auto's Comprehensive and Collision Insurance Lapse they can and generally will repo the vehicle rather than take the risk that something will happen to it and they may not get paid the balance of your note. Most drivers can not and will not continue to pay the finance note on the totaled vehicle as well as be able to afford an additional car note on a replacement vehicle.Furthermore since your lien holder is actually to a degree, a joint owner of the vehicle and a co-insured until the loan is paid off. The insurance company is required by law to notify the lien holder in the event your policy lapses or cancels. It's not that the insurer is punishing you, If the insurer fails to notify the lien holder of the lapse in coverage and a loss ensues. You bank or finance company can actually sue the insurer for not informing them of the lapse.Take care and Happy motoring.
1.27.2010
I dont belive they could.Your responsiblilty with the bank is to repay your loan.Typically the insurance company shouldnt contact the bank to tell them that your insurance isnt void.If you are unsure, the best thing to do is to pay your insurance, phone the bank and say that you missed a payment but its up to date now.EDIT. Sorry, Rules regarding loans and insurance are obviously different in Australia.
1.27.2010
They most certainly can and will. If you do not have insurance on a car that you are financing, that insurance company will notify the lein holder that the vehicle is uninsured adn the lein holder can reposses the vehicle, because they have no protection on their investment. If you were to wreck it and do not have the money to fix it yourself, then the leinholder is screwed and would be out the money to fix it. It is actually a violation of your financing contract to not have full coverage insurance. Source(s): Collision center manager
1.27.2010
They definitely can. They should give you numerous chances to reinstate your insurance, otherwise they will approach you to advise that they are adding it on to you contract. If you don't pay the additional fees, they will repossess the vehicle.** When they add insurance onto your contract they are only adding collision & comprehensive coverage. This protects their investment. In other words, you are driving around without liability insurance ** Source(s): Claims Adjuster 16 yrs
1.27.2010
Yes, they can. See, when your insurance gets cancelled, they put "forced placement" coverage on your car – at a cost of about 5X what your regular insurance is. Then, in accordance with the terms of your loan, they bill you for it. When you mail your payment in, it goes towards the forced placement coverage, and if there's any left over, then it goes to the actual car payment. So either you pay an extra $500 a month for insurance, or the loan goes into default, pretty quickly. It will usually be repo'd in 2-3 months. Source(s): agent, 21+ years
1.27.2010
YES! Most of them now include a provision in the loan contract that allows them to retrieve the vehicle if insurance lapses. That is there to protect their investment.Worse than that, many states can now ticket you for failure to have insurance. If the insurance company notifies the state, your license number will be on a list to watch for and they will nail you. You will have to pay a fine and then when you go to get insurance you will be charged more money because you are a "risk". Insurance companies love to whack on extra fees.Do yourself a favor. Call and reinstate your insurance. Most agents will take your checking account info and make an electronic transfer. If yours is not wiling to help you, get on the phone and do some shopping. OR, use the net to find some bargains on insurance, but I don't think it wise to drive that car without insurance. Take a cab, take a bus, ride a bicycle.Good luck there……
1.27.2010
no they cannot do that. id get new insurance really quick if your making payments on it. if your not paying on it than you better do it before you get pulled over and handed a ticket or get into an accident and have to pay for that out of your own pocket and get beyond screwed.
1.27.2010
No. They CAN place a vendors single interest insurance policy on the car and charge it to YOU (very expensive). If you don't pay, the car gets snatched…
1.27.2010
Of course they can. It's in the agreement you signed with them, that you agreed to but insurance.