If you plan to buy a new car, know that you’ll have to budget for more than a car payment. You’ll also have to get insurance on your new vehicle—and not just the minimum amount. Can you have just liability insurance on a financed car? The answer is no—you’ll need more than that. While liability insurance is all you need to meet your state’s requirements, the lender of an auto loan will require full coverage. Read on to learn more about insurance requirements for financed cars.
How Much Insurance Do I Need?The financing company will require you to have full coverage so they can protect the vehicle if you default. Full coverage includes the following types of insurances:
- Liability. This pays for damages and medical expenses if you cause an accident.
- Collision. This pays for damage to your vehicle, regardless of fault.
- Comprehensive. This covers damage by anything other than a collision, such as fire, weather, and vandalism. It also covers theft.